HomewardBound

Jail Bait

2008-05-28T14:57:00.000-04:00

For years, the condo conversion craze has turned abandoned warehouses, firehouses, & schools into hip personal dwellings. And then there's this:

Daily Real Estate News May 28, 2008

Maine: Why Not Buy an Old Stone Jail?

Anyone looking for security should check out the place just listed by Dawson Commercial Realty in Bangor, Maine.

It’s a roomy, brick and stone county jail in the middle of Skowhegan. Constructed in 1897, the 14,000 square-foot building is for sale for $200,000 and comes complete with razor-wire fencing. There are no zoning or permit-use restrictions, but Philip Roy, chairman of the Somerset County Commission, says only buyers with profit in mind should apply.

"I'd like to have it go back on the tax rolls of Skowhegan, and I'd also like to see it create jobs – ultimately, that's what we're looking for," he says.

Source: The Associated Press (05/28/2008)

Further Analysis of the Quarterly Comparisons & Some Suggestions

2008-05-20T12:45:00.001-04:00

I usually laugh when I hear national news regarding "the housing market" or "the real estate market". My reasoning is simple: All real estate is local. You've probably heard this statement a lot lately, so I apologize for adding to the cliche parade. This statement, however, is not only true, but it helps provide perspective when all of the housing news is dire.

Don't get me wrong, I am not here to sugar coat anything. Many markets across the country are down in some shape or form. Inventory is high, loan commitments are harder to obtain, and therefore, there are fewer buyers capable of absorbing the large inventory of listings. Still, depending on how one measures the different housing numbers, not every market is suffering.

I've analyzed three zip codes in the Louisville area for the past couple of years. My comparisons measure sales volume (total number of single-family home sold), high sale price, low sale price, median sale price, & average sale price. I then compare those categories for each quarter against the previous year's applicable quarter (i.e. year over year). To me, this is a more accurate comparison than to compare in a straight line quarterly sale figures. Granted, no measurement timeframe is perfect, but at least this type of analysis should help to equalize weather conditions & the frequency of holidays. Both of these factors are influential with regard to home sales.

Just looking at the 1st quarter of 2007 versus the 1st quarter of 2008, a few trends appear to hold across the board: Sales volume decreased substantially (20% in the 40205 zip; 54% in the 40206 zip; 32% in the 40207 zip), median prices are up in all three zip codes (11% in 40205; 9% in 40206; 11% in 40207), & average prices are up in all three zip codes (9% in 40205; 36% in 40206; 15% in 40207). So how do we make sense of such conflicting data?

From my perspective, it's pretty simple: The best products still sell, and they still sell for a good price. The problem for home sellers is, there's not as much overflow to help diminish the inflated inventory. Simply put, the buyers that are out there & actually capable of purchasing a home have the luxury of being picky. Once they find a home to purchase, there's still plenty of good choices available for the remainder of the smaller buyer pool. Buyers are more patient. They expect to get a fair, if not, great deal, and they're willing to look long & hard to find it. Since there's fewer buyers competing for the available properies, homes that look tired, cluttered, dumpy, and/or out-dated don't sell--unless they are offered at a discount. Few home sellers want to discount their price to a level that is required to sell it, and even fewer are willing to do a few things to their home to make it stand out. Thus, inventory remains high, and sellers remained convinced that the reason their home isn't selling has to do with something other than these two factors.

My question is: WHY? Many buyer objections can be mitigated with little expense to the seller. Simple things like cleanliness, fresh paint, & minimal landscaping can mean thousands to a seller, or at worst, these changes could be the difference between a sale & a home sitting on the market for months.

It's time for sellers to be proactive in regaining leverage in the transaction. Everyone believes leverage is clearly on the side of buyers, however, sellers can put serious pressure on prospective buyers to act fast by pricing their homes accordingly & sprucing up their homes so that every buyer that walks through the door perceives that this home is too good to pass up. In this current market, leverage might be more important even than location, location, location.

1st Quarter 2007 vs. 2008

2008-05-20T12:27:00.000-04:00

1st Quarter 2007: 40205

# of Sales-------High--------Low--------Median--------Average
----54--------$795,000-----$118,000-----$219,200-------$246,355

1st Quarter 2008: 40205

# of Sales-------High--------Low--------Median--------Average
----43--------$700,000-----$118,500-----$242,500-------$267,465

--------------------------------------------------------

1st Quarter 2007: 40206

# of Sales-------High--------Low--------Median--------Average
----61---------$475,000-----$36,000-----$149,000-------$171,718

1st Quarter 2008: 40206

# of Sales-------High--------Low--------Median--------Average
----28-------$1,050,000-----$66,000-----$162,976-------$233,798

--------------------------------------------------------

1st Quarter 2007: 40207

# of Sales-------High--------Low--------Median--------Average
----100------$1,260,000-----$120,500----$206,500------$260,903

1st Quarter 2008: 40207

# of Sales-------High--------Low--------Median--------Average
----68-------$2,300,624-----$123,000----$230,000-------$298,990

--------------------------------------------------------

4th Quarter 2006 vs. 2007

2008-05-20T12:06:00.000-04:00

4th Quarter 2006: 40205

# of Sales-------High--------Low--------Median--------Average
----76---------$1,000,000---$119,900----$218,000-------$243,179

4th Quarter 2007: 40205

# of Sales-------High--------Low--------Median--------Average
----84---------$779,500-----$139,00-----$215,000--------$252,778

---------------------------------------------------------------

4th Quarter 2006: 40206

# of Sales-------High--------Low--------Median--------Average
----40--------$1,150,000-----$68,204-----$199,000-------$251,546

4th Quarter 2007: 40206

# of Sales--------High--------Low--------Median--------Average
----39---------$500,000-----$65,000-----$195,000-------$216,038

-------------------------------------------------------------

4th Quarter 2006: 40207

# of Sales-------High--------Low--------Median--------Average
----88--------$2,350,000---$120,000----$210,000--------$284,858

4th Quarter 2007: 40207

# of Sales-------High--------Low--------Median--------Average
----66---------$880,000-----$112,337----$250,000-------$323,256

-------------------------------------------------------------

3rd Quarter 2006 vs. 2007

2008-05-20T11:48:00.000-04:00

3rd Quarter 2006: 40205

# of Sales-------High--------Low--------Median--------Average
----103------$925,000-----$102,000-----$210,000--------$247,795

3rd Quarter 2007: 40205

# of Sales-------High--------Low--------Median--------Average
----85--------$823,800-----$103,000-----$250,000-------$273,777

---------------------------------------------------------

3rd Quarter 2006: 40206

# of Sales-------High---------Low-------Median--------Average
----42--------$725,000------$60,000-----$170,000--------$248,415

3rd Quarter 2007: 40206

# of Sales-------High--------Low--------Median------- Average
----69-------$1,250,000-----$25,000-----$200,000--------$272,694

----------------------------------------------------------

3rd Quarter 2006: 40207

# of Sales-------High--------Low--------Median--------Average
----116------$1,850,000----$130,000-----$230,000-------$305,868

3rd Quarter 2007: 40207

# of Sales-------High--------Low--------Median--------Average
----102------$1,137,500----$117,000-----$228,000-------$269,187

----------------------------------------------------------

2nd Quarter 2006 vs. 2007: Finally Catching Up

2008-05-20T11:22:00.000-04:00

It's been awhile since I've posted comparison numbers for the three zip codes I've been monitoring for the past couple of years. I've finally caught up, and the figures are below for the 40205, 40206, & 40207 zip codes in the Louisville area. The numbers are based on the Greater Louisville Association of REALTORS MLS. As usual, the data include only single-family homes. Condos were excluded from this analysis. Enjoy!

2nd Quarter 2006: 40205

# of Sales:-------High---------Low--------Median----------Average
----105--------$1,700,000----$102,000----$203,608---------$247,244

2nd Quarter 2007: 40205

# of Sales-------High----------Low---------Median---------Average
----115--------$1,500,000----$117,000------$226,950--------$253,850

-----------------------------------------------------------------

2nd Quarter 2006: 40206

# of Sales-------High---------Low---------Median----------Average
----63---------$1,138,000----$67,500------$168,500---------$217,149

2nd Quarter 2007: 40206

# of Sales-------High---------Low---------Median---------Average
----66---------$800,000-----$39,900-------$182,000--------$221,496

------------------------------------------------------------------

2nd Quarter 2006: 40207

# of Sales-------High---------Low---------Median---------Average
----118-------$1,427,500----$114,000------$225,000--------$299,473

2nd Quarter 2007: 40207

# of Sales-------High---------Low---------Median---------Average
----139-------$1,025,000----$118,000------$215,000--------$283,927

-------------------------------------------------------------------

Derby

2008-05-02T10:49:00.000-04:00

The Derby happens tomorrow! It's a great time to be in Louisville.

Short Sale Tax Implications--REWIND

2008-05-02T10:27:00.001-04:00

I need to set the record straight it seems, as I've run across information that disagrees with my post regarding short sales & the tax implications for the sellers of short sales. It appears that back in December of 2007, President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007 which, for all intents & purposes, removes the former tax consequences that accompanied this type of forgiven debt. So instead of the seller of a short sale being taxed on the shortfall of what is owed on his/her home, the seller can sell his home short with no Federal tax liability. This is truly remarkable, and it's important to note that this law expires on December 31, 2009.

Most importantly, however, is that sellers of short sales consult their CPA or tax professional to ensure that they are completely & professionally informed of any tax consequences that could result from selling their home for less than what is owed.

Here's the article:

The IRS Forgives Until December 31, 2009

Thursday, May 01, 2008 - By Thomas M. Mitchell

If being in default and the threat of foreclosure aren't troubling enough, the thought of the IRS coming around after the fact is sure to keep sellers up all night. They have all heard the stories of being tracked down by the tax man to pay taxes on “forgiven debt.” To them it’s like a bad dream turned into a nightmare, all summed up and justified by a bunch of letters and numbers. But not every code section is necessarily a 4 letter word.

Code Sec 108(a)(1)(B),(C) – better known as 1401, means everything to some homeowners in today’s market … but it only has meaning in light of HR 3648. Then again, Section 163(h)(3)(b) is really the key to the whole thing. Make sense to you?

It doesn’t to your homeowners either. Staring foreclosure in the face they want to know if there is anything they can do. Can you sell their house before the deadline? In most cases your answer would be no because they are completely “upside down” but there are cases in which a short sale could work. And when you broach that subject one of the first questions they may ask is “what is our tax liability if we agree to a short sale?”

While the correct response is that you are neither a tax lawyer nor a CPA, you need to be able to let them know that if they qualify there are some options that may resolve that issue. And it all ties back to December 20, 2007, when President Bush signed into law a new measure giving tax breaks to homeowners who have mortgage debt forgiven. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

Why is this so important? In most instances, debt that is forgiven or cancelled by a lender must be included as (ordinary) income on the seller’s tax return and is taxable. There are a number of terms within the bill that are central to the issue, such as “Acquisition Indebtedness” – and you need to know them.

And don’t forget December 31, 2009. That’s the date when this tax break expires. It only applies to debts discharged from January 1, 2007 to December 31, 2009. And tell your sellers that “being insolvent” as a result of bankruptcy doesn’t count.

http://nationalrealtynews.com/content/templates/default.aspx?a=963&template=print-article.htm

What is a Short Sale?

2008-03-25T15:46:00.000-04:00

Short Sale as defined by the author:

A real estate short sale results when a home owner's lender approves the sale of his/her property for an amount less than the home owner owes on the property.

In most cases, the home owner is either entering into some stage of foreclosure, or realizes that he/she is nearing entrance into foreclosure. Many lenders actually require the home owner to fall behind on paying the mortgage in order to agree to sell the property short of what is owed, however, it's my opinion that those days are running out.

Given the high foreclosure rates in much of the country, these mortgage holders have many reasons to sell their holdings short instead of pursuing the more costly avenue of foreclosure.

It's also usually advantageous to home owners who fall behind on payments to pursue short sale approval from their lender. A short sale is not as damaging to a home owner's credit as a foreclosure. In a short sale scenario, the borrower is not responsible to pay back the shortfall, but would be responsible to pay taxes on the amount as a forgiven debt. Beyond that, it's difficult to get a read on where that borrower will stand regarding future home purchasing, and it typically varies from lender to lender. Certainly, a short sale does constitute some type of credit penalty, however, as of now, it's still less of a penalty than undergoing a foreclosure.

Going forward, it will be interesting to see how banks & mortgage companies handle new borrower applicants who have gone the short sale route. It's by no means a new problem, but a problem that is increasing in frequency by the day.

The other side of this coin is the purchaser(s) of a short sale. As I've said before regarding buying foreclosures: Just because it's a foreclosure does NOT mean it's a great deal. Similarly, just because a buyer chooses to purchase a short sale does NOT mean it's a good deal. And when I say "good deal", I'm only referring to the economic investment value.

Don't get me wrong, there are many advantages to purchasing foreclosures & short sales, but it's important to do one's homework regarding the value.

An advantage to purchasing a short sale is the prospect of getting a good economic deal on price. Another advantage is dealing with a lender who views the property as more of a serial number or liability than the home owner who views the property as his or her home with all of the emotional attachment that home ownership brings. In other words, it can be a rather sterile transaction. The process can be a little less like a poker game. It's more cut & dry.

The disadvantages to purchasing a short sale have mostly to do with time investment, patience, & fewer options on negotiating the terms of the deal. It can take days, weeks, or sometimes months to get to the closing table.

As banks & lenders realize a need for system implementation in the short sale arena, the time investment will likely lessen, but until then, it's smart to lower one's expectations regarding the promptness of the lender's response. In short, be patient. This is easier to do when the purchaser is certain that the deal is worth waiting for, but no matter how good a deal a buyer thinks he or she is getting, it's often difficult to play the waiting game.

The other disadvantage to embarking on a short sale adventure is negotiating the terms. Typically, buyers & sellers compromise somewhere to make a deal work. In the case of a short sale, the lender who must approve the sale perceives that they are giving up a lot in the form of sale price, so they want to dictate the other terms of the deal. Most of these sales are "as is", so the buyer can perform inspections on the property, but the seller/lender will forego any resonsibility to make repairs, corrections, or replacements to the property. This isn't always the case, but for the most part it is.

The lender/seller will also likely stipulate a fairly aggressive deadline to close the sale. This is ironic in a sense because it is often the lender that drags its feet in responding or approving the offer, only to then demand a quick close.

My advice is be prepared to wait, but while you're waiting, work closely with your agent in coordinating all of the details that result in a smooth closing. That way, when the lender says it's time to close, you're ready to proceed quickly.

For more information or a list of short sale opportunities, please e-mail me at cthomas@mulloyproperties.com

*Disclaimer: The information included in this post is based on the experience of the author in representing sellers & buyers in short sale transactions, and should not be relied upon for tax or credit purposes. Specifically, the processes and results of executing a short sale can vary dramatically depending on the situation.

Short Sales in the News

2008-03-25T15:41:00.000-04:00

More Banks Consider Short Sales

After about a year of dealing slowly and reluctantly with short sale offers, many banks are reconsidering, looking for solutions that will allow them to recoup debt in foreclosure situations.

Observers say that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts.

The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago.

"Before, people on the phone at banks didn't even have the authority to negotiate. Now they're calling us with numbers," says Pam B. Canada of nonprofit NeighborWorks in Sacramento, Calif.

To be sure, many agents and counselors think banks still have their heads in the sand. "They're out to get the last dime, even when people don't have a dime," says real estate practitioner Heidi Mueller in San Francisco as she heads to an auction sale on the courthouse steps.

Source: Forbes, Bernard Condon (04/07/08)

Mortgage Fraud on the West Coast

2008-03-25T15:28:00.000-04:00

Feds Charge 19 With Mortgage Fraud

Federal prosecutors announced 19 indictments Monday in a mortgage scheme that stole nearly $13 million in home equity and victimized more than 100 home owners.

Under the scam, home owners facing foreclosure were promised lower home payments and cash up-front if they agreed to add another name to their home’s title. The victims were led to believe they were paying rent to the investors to give them time to get their affairs in order, according to officials.

Prosecutors say the scam was headed by Charles Head of La Habra, Calif. Prosecutors say additional indictments are likely as they continue investigating.

In all, prosecutors say Head defrauded 115 financially strapped home owners in 22 states of at least $12.6 million. The fraud began in and continued through 2006.

Victims ranged from first-time home buyers to the elderly and cost 90 percent of the victims their homes, said Assistant U.S. Attorney Ellen Endrizzi.

Source: The Associated Press, Aaron C. Davis (03/24/08)

This is nothing new. These types of scams are likely in full force all over the country.

The premise is actually not all bad, as these types of arrangements are sometimes fair & actually helpful to the homeowner. It's never a good idea, however, to allow an unknown party to basically add themselves as part owners to a property without the third party having any responsibility to pay the mortgage. From what I can tell from this brief account, that's what happened.

It's an arrangement where an unscrupulous third party shows up to save the day without ever intending to make any payments on behalf of the troubled homeowners who do have payment responsibilities to their lender.

Museum Plaza Groundbreaking

2007-10-22T15:40:00.000-04:00

Groundbreaking ceremonies for the much anticipated Museum Plaza skyscraper are set to occur this Thursday, October 25, 2007. More details here.

It's exciting to me to see what's happening in downtown Louisville. The naysayers were many with regard to this project at its inception, but it certainly appears the promise of such a huge undertaking will come to fruition.

Metro Housing Corp. Stats

2007-10-17T17:51:00.000-04:00

Here are some interesting statistics just released by Metro Housing Corporation regarding the Louisville Metropolitan Statistical Area. It's an interesting read that basically reaffirms what we pretty much already know: Foreclosures are increasing, as are rents. There's good info about income vs. rental cost. Check it out.

A Peak at the Million Dollar Home Market in Jefferson County

2007-10-17T13:16:00.000-04:00

In some areas of the country, $1,000,000 won't get you much as far as housing is concerned(Manhattan for example), while in other areas, Million Dollar homes are relatively scarce. The Louisville Market has its fair share, but they are not at all prevalent. I thought it might be interesting to see how this tiny segment of the Louisville Market has evolved since 2000.

My research is based on the Greater Louisville Multiple Listing Service's records. I culled the sales of Million Dollar Homes from each year since 2000, and compared the data. Included are sales of new & existing homes & condominiums that sold for $1 Million Dollars or more. Excluded are raw acreage/land sales or any parcels or properties that could be developed for commercial use (including larger condominium conversions). Only properties located within Jefferson County were included.

Here are the results:

Year--# of Sales---Low--------High--------Average----Median
2000-----12-----$1,000,000---$2,275,000--$1,360,352--$1,190,000
2001-----13-----$1,060,000---$2,250,000--$1,333,846--$1,250,000
2002-----16-----$1,008,212---$2,098,000--$1,319,388--$1,168,750
2003-----13-----$1,000,000---$1,525,000--$1,234,904--$1,225,000
2004-----19-----$1,000,100---$2,250,000--$1,368,598--$1,200,000
2005-----39-----$1,000,000---$2,650,000--$1,442,262--$1,300,000
2006-----31-----$1,000,000---$2,880,500--$1,393,704--$1,195,000
2007*----38-----$1,000,000---$2,250,000--$1,308,770--$1,233,210

*=through 10/17/07. Additionally, there are 4 PENDING sales that would qualify upon closing.

Currently, there are 83 properties listed for sale that meet the criteria. At the current pace, that's over two years worth.

Since I'm not much of a proponent of looking at an entire metro area as one market, I broke down the areas in which these Million Dollar sales occurred. Here is a geographical description of each area represented in the Louisville Area:

Area 00: The Central Downtown Business District, loosely defined as north of Broadway, east of 9th St., south of the Ohio River, & west of Baxter Ave.

Area 01: Old Louisville/West Louisville/Shively, loosely defined as south of Broadway, east of 44th St., north of I-264, & west of S. Brook St.

Area 02: Butchertown/Highlands/Germantown, loosely defined as north of I-264, east of I-65, southwest of Lexington Rd.

Area 03: Brownsboro Rd./Crescent Hill/St. Matthews, loosely defined as east of Story Ave., south of the Ohio River, west of Rudy Ln. at I-264, north of I-64 at Cannons Ln.

Area 07: Fern Creek/Hikes Point/Jeffersontown

Area 08: Douglas Hills/Hurstbourne/Middletown Anchorage

Area 09: Anchorage/Lyndon/Prospect/River Rd.

Year-----Area------# of sales
2000----- --00------------0
2000--------01------------0
2000--------02------------2
2000--------03------------3
2000--------07------------1
2000--------08------------0
2000--------09------------6

Year-----Area------# of Sales
2001-------00-------------0
2001-------01-------------0
2001-------02-------------0
2001-------03-------------4
2001-------07-------------0
2001-------08-------------5
2001-------09-------------4

Year-----Area------# of Sales
2002-------00-------------0
2002-------01-------------0
2002-------02-------------0
2002-------03-------------4
2002-------07-------------0
2002-------08-------------5
2002-------09-------------7

Year-----Area------# of Sales
2003-------00------------0
2003-------01------------0
2003-------02------------2
2003-------03------------2
2003-------07------------1
2003--------08-----------6
2003--------09-----------3

Year-----Area------# of Sales
2004------00-------------1
2004------01-------------0
2004------02-------------2
2004------03-------------2
2004------07-------------0
2004------08-------------6
2004------09-------------8

Year-----Area------# of Sales
2005-------00------------0
2005-------01------------0
2005-------02------------2
2005-------03------------12
2005-------07------------0
2005-------08------------8
2005-------09------------17

Year-----Area------# of Sales
2006-------00------------5
2006-------01------------0
2006-------02------------2
2006-------03------------9
2006-------07------------0
2006-------08------------4
2006-------09------------11

Year-----Area------# of Sales
2007-------00------------0
2007-------01-------------1
2007-------02------------7
2007-------03------------6
2007-------07------------0
2007-------08------------5
2007-------09------------20

Current Active Listings FOR SALE
Area 00: 4
Area 01: 1
Area 02: 3
Area 03: 18
Area 07: 3
Area 08: 21
Area 09: 33

So What Does It All Mean?

I'd say the data suggests that purchasing a home for over $1 Million Dollars is a bit of a risk in the Louisville Market. Don't get me wrong, it's encouraging that the total number of sales of these type properties is increasing. The values on the other hand are fairly flat, so be sure to have the home in tip top condition when needing to sell. Buyers in this range demand a lot and at times are hard to come by. Despite the challenges, this segment of the market is doing better than others in the area. More on that later...

What is that?

2007-07-09T12:52:00.000-04:00

I take pride in the pictures I take of properties I represent. Pictures of a property are crucial in attracting today's home buyer. In fact, I've spoken with quite a few buyers who won't even consider looking at a home unless the on-line listing features interior photographs of the property. So when I was alerted to this website created by a Wisconsin REALTOR & featuring some of the worst real estate pictures he's been able to compile, I had to post it here. Having viewed hundreds of terrible real estate photos myself, I empathize with his viewpoint. Enjoy!

Tips on Real Estate Investing: Foreclosures

2007-06-29T16:18:00.000-04:00

There's news everywhere regarding the national foreclosure rate. From today's REALTOR Magazine On-line, here are some solid tips, the best of which is simply that just because a property is a foreclosure doesn't mean it's a good deal, should you decide to invest in a foreclosure:

7 Tips for Foreclosure Property Investing

With foreclosures rising nationwide, prices falling, and inventories swelling to historic levels, investors with a discerning eye and knowledge of the foreclosure process can build a profitable portfolio of distressed properties, says James Saccacio, CEO of RealtyTrac, which tracks foreclosure data.

Saccacio offers this basic advice to foreclosure investors:

Know your market. The most important tool in your real estate investing toolbox is knowledge of the area where you plan to invest.

Develop an appropriate investment strategy. Find an investment strategy that will work in your market, and then do what it takes to implement that strategy.

Make the foreclosure process work for you. Decide what foreclosure buying technique works best with your investment strategy and your strengths as a person.

Scrutinize each deal. Many real estate investors wrongly assume that if a home is in foreclosure it's a good deal.

Rely on a trustworthy team. You'll be in over your head if you try to do all the work involved in foreclosure investing on your own.

Network with banks and lenders. In a slow real estate market, banks and other lenders are saddled with larger inventories of foreclosed properties and will be more motivated to sell those properties at bargain prices.

Act quickly, but don't be in a hurry. A slow real estate market gives you the upper hand as a buyer, but you'll still need to act quickly to get the best deals.

— REALTOR® Magazine Online

Thoughts on Real Estate Licensing

2007-06-28T12:38:00.000-04:00

Many industries struggle to maintain a certain level of professional respect, however, some lines of work such as real estate sales & insurance sales, seem to have never quite gotten past the point of being a punchline. Nowadays, marketing is everything. Look at lawyers, dentists, & other medical specialists, professions where even the thought of advertising used to be offensive. There are commercials everywhere, and not only is it becoming accepted, it's becoming absolutely necessary to the vitality of many of these practitioners. Granted, there are still those who do quite well for themselves and are completely referral-based (my dentist comes to mind), but these examples have built practices the hard way through years of grinding it out, one client at a time. I'm not trying to draw a direct parallel between law or medicine & selling real estate, but some of the challenges to answering the perception question are similar.

Consider the following article written by former National Association of Realtors Chief Economist, Dr. John Tuccillo. The perception of the profession of selling real estate will not graduate beyond an "anybody can do it" sort of hobby until changes are made regarding entry into the occupation. During the "boom years", this mentality was only bolstered as huge ranks of people jumped into the art of selling real estate with both feet. It was easy to make a quick buck. As 2007, however, is half over, many agents are struggling to make a living as the market downturn is affecting marginal producers. Perhaps the downturn will weed out many agents, which at least in theory, could be a good thing. Or, perhaps it will be a catalyst to a greater change in how people become real estate agents.

Many agents, including myself, have been screaming for higher standards for gaining a real estate license since way before 2007. It is absurd to think that someone who has as much influence on what, in many cases, is the largest financial transaction many people will ever make can gain the ability to do this through attending 90 hours of academic classroom material, passing a test, & paying some fees. Large brokerages have been fueled by attracting huge numbers of agents knowing that even the least capable agent might fall into a deal or two in one year, but is this really good for the industry? The above referenced article appears to answer that question directly. Let's hope its merits produce better agents & a better, more legitimate industry as a whole.

Catching Up: 1st Quarter Comparison '06 & '07

2007-05-30T10:12:00.000-04:00

40205: SOLD 1/1/06-3/31/06

Total # of Sales: 66
High: $543,000
Low: $110,000
Median: $190,000
Average: $203,552

40205: SOLD 1/1/07-3/31/07

Total # of Sales: 53
High: $795,000
Low: $118,000
Median: $226,000
Average: $248,097

------------------------------------------------------------------------------------------------

40206: SOLD 1/1/06-3/31/06

Total # of Sales: 28
High: $510,000
Low: $68,800
Median: $174,750
Average: $183,932

40206: SOLD 1/1/07-3/31/07

Total # of Sales: 57
High: $475,000
Low: $ 36,000
Median: $145,000
Average: $172,841

------------------------------------------------------------------------------------------------

40207: SOLD 1/1/06-3/31/06

Total # of Sales: 73
High: $675,000
Low: $129,000
Median: $198,000
Average: $220,741

40207: SOLD 1/1/07-3/31/07

Total # of Sales: 99
High: $1,260,000
Low: $120,500
Median: $ 206,500
Average: $260,356

------------------------------------------------------------------------------------------------

Catching Up: 4th Quarter '06 & '05 Comparison

2007-05-29T17:07:00.000-04:00

40205: SOLD 10/1/05-12/31/05

Total # of Sales: 76
High: $775,000
Low: $84,900
Median: $183,000
Average: $204,160

40205: SOLD 10/1/06-12/31/06

Total # of Sales: 75
High: $1,000,000
Low: $119,900
Median: $218,000
Average: $236,577

------------------------------------------------------------------------------------------------

40206: SOLD 10/1/05-12/31/05

Total # of Sales: 57
High: $1,470,000
Low: $29,000
Median: 182,000
Average: $236,695

40206: SOLD 10/1/06-12/31/06

Total # of Sales: 39
High: $1,150,000
Low: $68,204
Median: $185,500
Average: $253,126

------------------------------------------------------------------------------------------------

40207: SOLD 10/1/05-12/31/05

Total # of Sales: 101
High: $1,950,000
Low: $132,000
Median: $228,000
Average: $307,640

40207: SOLD 10/1/06-12/31/06

Total # of Sales: 84
High: $2,350,000
Low: $120,000
Median: $209,000
Average: $281,013

------------------------------------------------------------------------------------------------

Well, the 40205 zip remained incredibly strong in the year over year comparison. Total of sales were basically unchanged, but median & average prices were up dramatically. Prices in 40206 were up, but sales were down noticeably. The 40207 zip was dismal, posting lower total sales & prices.

Time to Trim the Fat?

2006-11-30T15:46:00.000-05:00

The Courier-Journal reports Louisville Metro Councilman,Dan Johnson, is going to propose an ordinance that prohibits Louisville area restaurants from using trans fatty acids in their menu offerings. Interesting...

Adjustable Rate Mortgages Continue to Get Pummeled

2006-11-30T15:16:00.000-05:00

Looking at the news, much has been made about the so called housing bubble & the effect that exotic mortgages are having on the general housing market. Recently, the CEO of Countrywide, one of the largest mortgage lenders in the United States, offered his estimate of the level of understanding that he feels his customers have of Adjustable Rate Mortgages (ARMs) & other non-traditional mortgage products that have risen in popularity over the past few years. He feels that these products aren't as much of a mystery as some advocacy groups believe they are. What is also interesting is that there is fear that these types of loans are disproportionately hurting less affluent borrowers.

As a former mortgage loan officer, I admit that exotic mortgages were just beginning to gain in popularity when I made my exit from the profession, so I'm not as familiar as some, however, having shopped for an ARM myself, I think it is a bit curious to suggest that the pitfalls of exotic mortgages only affect the not-so-wealthy borrower.

My wife & I initially financed the purchase of our home back in 2004 with a 90/10 loan. This loan features a 90% First Mortgage locked for 5 years & a 10% Second Mortgage that adjusts after the first year. This mortgage product was attractive to us because it prevented us from paying Private Mortgage Insurance (PMI). We eventually needed to refinance the 2nd to pay off a few things, so that's when I began inquiring about an interest only loan. It's extremely important to point out that our total debt on the home was quite modest (less than $130,000). We looked into combining both mortgages on an interest only loan with about $7,000 additionally to pay off a debt or two. Come to find out, this type of scenario did nothing for our bottomline. It didn't reduce our monthly payment, and obviously, it didn't reduce our principal loan amount. Not that I needed him to tell me, but the mortgage professional I spoke with said that the deal didn't make sense.

I bring this up because it illustrates how an interest only ARM doesn't really benefit someone borrowing a nominal amount of money, i.e. a less affluent borrower. If we had purchased a more expensive home, then the monthly payment would have looked more attractive, but my wife & I would still have had to explore all the pros & cons regarding this product before making a decision. Obviously, in our case, the exotic mortgage didn't make sense because our total debt service was relatively cheap & stable enough that it didn't warrant much change, but even if the monthly payment had been cheaper, it wouldn't have saved us much each month. Similarly, less affluent buyers are not likely to be able to afford a home where an exotic would make sense either, so I'm not quite sure how ARMs can be said to disproportionately affect less wealthy borrowers in a negative fashion. It seems to me that borrowers who are finding themselves with huge payment increases were not all poor, but instead, they did not take into consideration all of the hurdles that might emerge later.

This brings me to my next point: It is absolutely crucial to do your homework when making crucial buying decisions. Find answers from someone you trust to be straight with you so that you can avoid dangers like predatory lending or merely keeping up with the Joneses. As I stated, the mortgage professional I spoke to said the deal didn't make sense. Furthermore, he didn't try to get me to see it another way in hopes of putting more money in his pocket. Instead, he referred me to someone else in his office to handle refinancing my second mortgage.

The bottomline is there are very few one-size-fits-all products available whether you're buying a belt or a mortgage. Exotic mortgages are a solution to some, but a nightmare to others. It would be over-simplifying the issue to say that all ARMs are bad, but given the huge magnitude of borrowing money, it only makes sense to balance the information available concerning the loan with what you know about your foreseeable future. The results might not be guaranteed, but at least your decision will be an educated one.

Happy Thanksgiving...

2006-11-22T17:21:00.000-05:00

Thanksgiving is my favorite holiday. It's been the one holiday over the years that much of my extended family has circled on the calendar as the one where we all get together. I don't know what is more surprising: That we've chosen Thanksgiving as our annual reunion or that I actually look forward to seeing my extended family. Either way, I love this holiday. There's never been a better nap than the one that yearly follows Thanksgiving dinner. Another great thing is it's always on Thursday, so there's no complaining about getting snubbed on how many days off you get. It also brings home the point that I should be thankful more often. It's easy to look at it as one day of thanks, but I hope it challenges me to a higher level of gratefulness.

I also think the Presidential tradition of "pardoning" a turkey is hilarious. Yeah, it's hokie, but I get a kick out of it every time.

Cheers to you & yours...

3rd Quarter Numbers

2006-10-19T16:33:00.000-04:00

It's hard to believe that the third quarter of 2006 has come & gone, but it is true. I've crunched the statistics in the 40205, 40206, & 40207 zip codes here in Louisville, and what I've discovered is a bit surprising. Again, these are existing homes, and the numbers exclude condominiums.

3rd Quarter Sales, 2005

40205:

Total: 87
Low: $86,500
High: $1,000,000
Median: $195,000
Average: $234,761
Avg DOM: 48

40206:

Total: 63
Low: $64,500
High: $510,000
Median: $173,500
Average: $208,590
Avg DOM: 48

40207:

Total: 135
Low: $119,000
High: $1,550,000
Median: $215,900
Average: $311,010
Avg DOM: 49

3rd Quarter Sales, 2006

40205:

Total: 95 (+8)
Low: $102,000 (+15,500)
High: $925,000 (-75,000)
Median: $210,000 (+15,000)
Average: $243,605 (+8,844)
Avg DOM: 52 (+4)

40206:

Total: 40 (-23)
Low: $60,000 (-4,500)
High: $725,000 (+215,000)
Median: $170,000 (-3,500)
Average: $242,399 (+33,809)
Avg DOM: 56 (+8)

40207:

Total: 114 (-21)
Low: $130,000 (+11,000)
High: $1,850,000 (+300,000)
Median: $$228,000 (+12,100)
Average: $308,074 (-2,936)
Avg DOM: 58 (+9)

2nd Quarter Numbers: Highlands, Crescent Hill/Brownsboror Rd./St. Matthews

2006-08-17T16:03:00.000-04:00

The numbers are in (and have been for some time, but I've just now posted them) on the three zip codes I follow most closely here in Louisville, KY. Just as in the first quarter, I compared closed sale numbers from 2006 with those of 2005 in measuring the following categories: Total number of sales, high sale, low sale, median sale price, average sale price, & average days on market. I also gathered pending sale numbers measuring the same categories as well as active listings as of June 30, 2006. These statistics are below.

The total number of sales in all three zip codes were up slightly over a year ago, with the 40206 zip code experiencing the biggest gain. Otherwise, total sale numbers are relatively unchanged, which is encouraging news & confirms that these markets are stable.

Average closed sale prices were down minimally compared to a year ago in 40206 & 40207, and up slightly in 40205.

The median sale prices were down slightly in 40205 & 40206, and up a smidge in 40207.

The outook in my view is certainly favoring buyers as inventory is up in most of the Louisville area. Prices will remain strong for homes that sell, but I see a lower total sale number in the third quarter and fewer interested buyers currently in the market. This is ironic because the environment is very good for buyers with levelling interest rates in the mid-6% range & so much to choose from. Granted, many potential buyers are possibly taking a wait & see approach since they too will have to sell in order to buy, but anyone not needing to sell might consider a move.

Active Listings as of 6/30/06

2006-08-17T15:58:00.000-04:00

40205

Total: 115
Low: $124,900
High: $1,025,000
Median: $249,900
Avg: $267,348

40206

Total: 73
Low: $85,000
High: $1,750,000
Median: $239,002
Avg: $358,747

40207

Total: 168
Low: $125,000
High: $2,350,000
Median: $239,650
Avg: $361,037

2nd Quarter Pending Sales, 2006

2006-08-17T15:57:00.000-04:00

40205

Total: 38
Low: $119,500
High: $699,500
Median: $214,000
Avg: $272,793

40206

Total: 17
Low: $68,000
High: $595,000
Median: $162,500
Avg: $184,685
Avg DOM: 48

40207

Total: 42
Low: $134,900
High: $1,800,000
Median: $236,950
Avg: $307,109
Avg DOM: 50

Closed Sales, 2nd Quarter, 2005

2006-08-17T15:42:00.000-04:00

40205

Total: 97
Low: $101,250
High: $1,050,000
Median: $205,000
Avg: $244,561
Avg DOM: 40

40206

Total: 46
Low: $43,000
High: $834,500
Median: $172,500
Avg: $217,857
Avg DOM: 53

40207

Total: 118
Low: $118,000
High: $2,050,000
Median: $215,000
Avg: $298,238
Avg DOM: 55

Closed Sales, 2nd Quarter, 2006

2006-08-17T14:46:00.000-04:00

40205

Total: 104
Low: $102,000
High: $1,700,000
Median: $ $203,608
Avg: $252,641
Avg DOM: 47

40206

Total: 58
Low: $67,500
High: $1,138,000
Median: $163,950
Avg: $210,705
Avg DOM: 37

40207

Total: 115
Low: $114,000
High: $1,427,500
Median: $226,250
Avg: $290,964
Avg DOM: 59

Study: Downtown Louisville's Proposed Arena Would Boost Economy

2006-06-20T09:58:00.000-04:00

My response is: Did we need a study to conclude that the proposed downtown arena will bolster the economy? More here.

More On Louisville's Hotel Front

2006-06-16T09:11:00.000-04:00

A debate is underway as to whether or not the addition of a downtown Louisville arena warrants another downtown hotel, and if it does, then how many rooms will the market bear? More here from this morning's C-J.

Downtown Marriott SOLD

2006-06-15T08:12:00.000-04:00

The transaction is part of a four hotel deal in which Black Entertainment Television founder, Robert L. Johnson, is the "controller" of the purchasing group according to this morning's C-J. The deal includes another downtown Louisville newcomer & Marriott sibling, The Residence Inn Downtown Louisville.

Louisville Area Locales Considered for Historical Places Designation

2006-06-06T15:30:00.000-04:00

More from Business First, the Louisville area looks to increase its already-impressive number of historic places when The Kentucky Historic Preservation Review Board meets on Wednesday, June 14 to consider Mockingbird Valley neighborhood among others.

Louisville the BEST

2006-06-06T15:27:00.000-04:00

According to this Business First article, Louisville, KY was named the best city for relocating families.

Yeah, but Who Can Afford It???

2006-06-06T10:55:00.000-04:00

Selling the Priciest House in All the Country(June 5, 2006) -- Anyone who wants to tour the house with the highest asking price in the country better be prepared to prove a net worth of $500 million or annual salary of $10 million.

The house is a 30,000-square-foot mansion known as Portabello perched on a cliff in Corona del Mar, Calif., south of Newport Beach. It’s priced at $75 million.

Some local real estate professionals are shaking their heads. ''Every agent in town is talking about it,'' says real estate associate Mark Whitehead, who sells homes in Corona del Mar. "It's a joke. It's an image thing. It's an ego trip to sell the most expensive home on the market.''

Bill Cote, owner of Cote Realty Group in Newport Beach, noted Portabello's asking price is 300 percent more than the highest amount paid for an Orange County home.

Listing agent, John McMonigle of Coldwell Banker Previews International, declined to comment but released a statement saying that the house was reasonably priced considering the land was worth $45 million and it would cost up to $1,500 per square foot to rebuild the home.

The estate belongs to Frank Pritt, who in 1982 founded software maker Attachmate Corp., a large privately held technology company in Bellevue, Wash.

Source: The Los Angeles Times, Mai Tran (06/04/2006)

An Alternate Take on Refinancing ARMs

2006-05-31T13:57:00.000-04:00

Should ARM Borrowers Refinance or Stand Pat?(May 31, 2006) -- Home owners who took out adjustable-rate mortgages are facing big payment increases. But refinancing may not be the best solution, experts say.

ARMs made up 42 percent of all new home mortgages in 2005, up from 14 percent in 2003, according to LoanPerformance, a San Francisco-based research outfit.

As one example of how payments have increased, the starting rate on a 3/1 ARM — a loan with a fixed rate for three years — has risen to 6.17 percent from 3.80 percent in 2003. That translates into a $220-per-month increase.

But before they refinance to lower their payments, ARM borrowers should consider standing pat. If the annual adjustment is capped at 2 percent, the rate will rise to 5.8 percent in the first year — that's less than a 30-year fixed rate right now.

Plus, refinancing costs are high, says Keith Gumbinger, vice president of HSH Associates, which tracks the mortgage industry.And by the time another year rolls around, rates could go back down.

Gumbinger is among those who believe the Fed’s next move will be to push rates back down to jumpstart a slowing economy.

Source: SmartMoney, Reshma Kapadia (06/01/2006)

Lots of interesting stuff in there: I'm left wondering if all ARMs are capped at 2%. Also, are second mortgages counted in the 42% of all new home loans in 2005 that were ARMs? Mr. Gumbinger is the first person I've seen who feels that rates will be reduced any time soon.

Slighted Markets Look for Gains

2006-05-31T09:31:00.000-04:00

Housing Analyst Says the Heartland's the Next Winner(May 30, 2006) --

A new statistical analysis of housing price cycles in 100 major metropolitan areas suggests that real estate action is shifting to areas that didn’t enjoy the recent housing boom.

Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, examined historical housing price movements and concluded that middle America markets like Columbus, Ohio; Indianapolis; Houston; San Antonio; Memphis, Tenn.; Atlanta; Cincinnati; Des Moines, Iowa; and Louisville, Ky., are due for above-average price increases and home building because of expanding employment bases and moderate housing prices.

Cagan also doesn’t believe what he calls the shooting stars of housing booms like most of California, Florida, Washington, D.C., New York City, or Boston are going to incinerate. He simply believes appreciation rates will dwindle to the low single digits or go flat for awhile as incomes catch up.

His bottom line: Figure out where your community is in the cycle and adapt.

Source: Washington Post Writers Group, Kenneth R. Harney (05/28/06)

Most Affordable Housing Markets

2006-05-26T15:32:00.000-04:00

According to CNN.com. Louisville doesn't appear to have been part of the research. The only Kentucky area rated is Northern Kentucky/Greater Cincinnati.

Land Sale to be "Studied" After the "Fact"

2006-05-26T14:43:00.000-04:00

I'm as confused as the next guy on this story from today's C-J which leaves more questions than answers regarding an aparent land sale in Frankfort. According to the article, a veterinarian in Frankfort recently purchased land from a church (including the church itself) for $450,000 with the intention of putting an animal hospital on the land. When her zoning change couldn't be secured, she appears to have sold the land seven weeks later to The Kentucky Retirement Systems, an entity that invests funds & administers benefits to employees & retirees of state & local government. The Kentucky Retirement Systems now wants to "study" the "sale" based on the hiked price, some unaccounted for personal property, & a $28,000 real estate commission. The seller, Caroline Bevins-Taylor, says she told the agency how much she would sell it for, and the agency agreed. However, no contract or bill of sale could be obtained with the details of the aparent transaction. If no contract exists, then it will be difficult to know what, if anything, has actually taken place. Not to mention, a church spokesman says the property had been listed for sale for quite some time when Ms. Bevins-Taylor purchased it producing the logical conclusion that the agency, had it wanted to, could have purchased the property only seven or eight weeks earlier for nearly $300,000 less than it paid.

As the facts roll in, I'll be sure to follow, but at this point, I'm scratching my head as what case the agency can make no matter how much "studying" they undertake. First, find out if a contract even exists, and then go from there. If one does exist, I don't see how that makes the sale any less viable. Undoubtedly, it will be interesting to see where the blame falls.

90 More "High Tech, High Wage" Jobs Hopeful for Louisville

2006-05-26T14:26:00.000-04:00

The expansion of BAE Systems, a defense plant that would make gun magazines, could mean 90 more jobs for Louisville according to this C-J blip. The plant would be built near River Road & Zorn Avenue on the Ohio River. These jobs will average more than $47,000 per worker per year.

Just Don't Sell the Beast!

2006-05-24T16:30:00.000-04:00

Kings Island, a favorite amusement park in the Ohio Valley region, sold packaged with four other parks for $1.24 Billion. I only hope the Cincinnati-based park keeps its healthy supply of coasters!

National Housing Market News

2006-05-24T16:11:00.000-04:00

The numbers are in on the national real estate market's 1st Quarter. As this Biz Journal article states, the thought of a "national" real estate market is a bit absurd. Undoubtedly, the craziness of the past few years in places like Las Vegas, Phoenix, & Boston is clearly sobering, however, much of the country's local real estate markets aren't likely to take a hit.

My research of three zip codes here in Louisville in the 1st Quarter of '06 vs. that of '05 is in the archives of this blog, and I am looking forward to looking at the 2nd, 3rd, & 4th Quarter numbers as they become available.

My own perception of the local market is that there are fewer buyers in the market at this time compared to last year. Inventory nearly everywhere appears to be up. Sale prices, however, remain strong. This news puts a premium on pricing accuracy. It will also be interesting to see if some of those priced out of housing in the former boom markets might look to relocate to area that never did really boom.

Big Ticket Homes Immune to Bubble Talk?

2006-05-24T15:58:00.000-04:00

Well, not really, but it is an interesting occurence nonetheless:

The Multimillion $ Market is Still Hot, Hot, Hot(May 22, 2006) --

Despite a cooling real estate market, one segment that remains red hot is the multimillion-dollar market.

In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, a DataQuick analysis shows.

In Palm Beach, Fla., 10 homes sold for $5 million or more in the first quarter, up from eight last year. And in Jackson, Wyo., 21 homes, up from 17, sold for more than $3 million, according to Jackson Hole Real Estate and Appraisal.

Mark Zandi, chief economist at forecasting firm Moody's Economy.com, says the segment of high-end buyers "won't be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically."

Source: The Wall Street Journal, Troy McMullen (05/19/2006)

OK, All Bets Are Off!

2006-05-23T13:16:00.000-04:00

My Preakness prediction was a bit off as these results will surely attest. Diabolical was last! Bernardini looked incredible.

Of course, the story that has created the biggest noise is Barbaro's status. After breaking his ankle in two places, his future as a race horse is not viable & even his stallion retirement is in doubt. It made me sick to see the video replays of him running awkwardly as his hoof appeared to be almost detached & rubbery as Edgar Prado attempted to pull him back.

I told friends of mine that I couldn't see Barbaro losing unless something weird happened, and Barbaro's premature start & subsequent injury certainly qualify. I hope he makes it.

The Second Jewel of the Triple Crown

2006-05-19T13:50:00.000-04:00

Well, here we are two weeks after Barbaro ran away with the Derby in Louisville against a field of 20 horses. It's Preakness Eve, so what's the story looking like in Baltimore? Barbaro will have a lot more room to operate since the Preakness field features only nine horses. The Kentucky Derby champ drew Post # 6 smack dab in between #5, Brother Derek, & #7, sweetnorthernsaint, which are the two horses probably most capable of beating the favorite. Brother Derek & sweetnorthernsaint ran 4th & 7th, respectively, in the Derby. I can't imagine how Barbaro loses the Preakness, but why bet on him? He's likely to be even money or worse, so I'm going to go with Diabolical for no other reason than he's a beefy 30-1 payoff.

Time for Some Sanity

2006-05-17T13:52:00.000-04:00

I know it probably reads as though I'm desperately trying to dissuade the entire populace that a real, live real estate bubble is upon us, but thanks to Shawn Tully of Fortune Magazine/CNNMoney, a portrait of clarity does exist on this bubble madness. The following excerpt is probably one of the more important & leased disclosed statement ever regarding the so-called bubble:

"In either case, many individual homeowners have nothing to worry about:
They can simply stay put and ride out the cycle. The only thing they'll lose
is
the opportunity to brag about their paper profits. And in some places,
appreciation has been so sharp that a seller could see prices plunge 30
percent
and still make a hefty gain.

The real losers will be those
who bought recently at inflated prices and
are forced to sell, usually
because they're taking a job in another city or
can't make the payments when
their adjustable mortgage rate jumps. And
speculators who bought overpriced
condos in hope of a quick killing are going to
get hosed."

Economy Mixed?

2006-05-17T12:44:00.000-04:00

I don't feel qualified to comment on much found in this C-J column except the part about...you guessed it...housing. It's not necessarily a bad thing that April housing starts for new construction are down nearly 7.5%. This is evidence that the market works. It is no wonder developers & builders are less inclined to build new when inventory is creeping up. The total number of home sales is down based on last year in some, but not all, locations across the country, which shouldn't come as a surprise either given the five consecutive years of housing sales records that preceded the decline.

There are some metros that are benefitting from the pie in the sky prices that are being asked in the "boom" markets. This should come as no surprise. Not everyone can live, nor should they want to live, on the West Coast or in other areas that saw heavy gains in the past five years. It only stands to reason that nice cities with strong economies will attract pools of buyers unwilling or incapable of purchasing in their "dream" location. Attractive affordable metros like Albuqurque, NM & Denver, CO are prime to see nice gains.

The news for Lousiville looks good as well. The recent decision by UPS to add nearly 5,000 new jobs in the coming months will certainly help to absorb a chunk of the housing inventory.

UPS Expansion Means Business

2006-05-17T12:15:00.000-04:00

United Parcel Service will hire around 5,000 more workers as part of its expansion in Louisville. The expansion includes adding 1,284 full-time workers as well as 3,787 part-timers. For more on the economic impact of the move, check out morethanderby contributor, Todd Earwood's take.

1st Quarter Numbers Nationwide

2006-05-16T10:18:00.000-04:00

NAR: First Quarter State Existing-Home Sales Ease(May 15, 2006) --

Existing-home sales, including single-family and condo, remained historically high in the first quarter but have experienced a downtrend since hitting a record in the third quarter of last year. Even so, 26 states showed increases in sales activity from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.

The latest report on total existing-home sales shows that the seasonally adjusted annual rate* was 6.80 million units in the first quarter, down 2.1 percent from the 6.94 million-unit level in the first quarter of 2005.

The biggest increase was in New Mexico, where existing-home sales rose 26.2 percent from the first quarter of 2005. Louisiana’s first-quarter resale pace rose 22.9 percent from a year earlier, while Montana experienced the third strongest gain, up 17.5 percent. Six other states recorded double-digit sales increases from a year ago. Twenty-one states and the District of Columbia experienced declines. Complete data for three states was not available.

David Lereah, NAR’s chief economist, said rising interest rates have dampened sales. “A steady rise in mortgage interest rates has slowed home sales in higher cost areas, yet job growth in some moderately priced markets is boosting sales in other areas,” he said. “The net effect is a modest decline in home sales for the nation as a whole, but sales remain historically strong and are providing a solid underlying base for the overall economy.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.24 percent in the first quarter, up from 6.22 percent in the fourth quarter; it was 5.76 percent in the first quarter of 2005.

NAR President Thomas M. Stevens from Vienna, Va., said the sales pattern is expected to level out. “We project home sales may soften a little further before picking up in the fourth quarter, but we’re not looking for any significant changes in the market moving forward,” said Stevens, senior vice president of NRT Inc. “This should provide stability in the market so that buyers and sellers will be on a fairly level playing field in most of the country.”

More detail is online.

Source: NAR

Downtown: Historic Portland Home Undergoing Makeover

2006-05-12T08:18:00.000-04:00

It's National Preservation Month, and the Squire Earick House in Louisville's Portland Neighborhood is receiving restoration. More from today's C-J here.

In Case You Missed It...

2006-05-12T07:56:00.000-04:00

Because I sure did, Ron Schoolmeester penned a great piece on Louisville for USA Today last week. Obviously, the timing was right considering the horse race that occurred on Saturday, but the majority of the article focuses on a Louisville that appears ready to embrace a more unique identity. Highlights include comments by Lynn as well as 21c proprietors, Steve Wilson & Laura Lee Brown.

Downtown will Welcome Bluegrassers in August

2006-05-11T16:44:00.000-04:00

This is great news. I am interested to see what the lineup looks like for The Kentucky Bluegrass Festival. I still have some nice recordings of some of my favorite 'grassers from when this was an annual festival held on the Belvedere in the '80s. Since Louisville lost the IBMA Festival & Awards Show to Nashville, it's nice to see that large quantities of banjos & fiddles will be returning to Louisville's downtown area this August 4 & 5.

Here's yesterday's blip from Business First. Once the lineup is introduced, I'll be sure to take yet another break from posting real estate related material & post who will be playing. Would love to see Sam, Bela, and/or Del, which would not be unheard of based on the kinds of quality this particular festival used to attract.

Back to Work: Proposed Arena Will Push Luxury Box Limits

2006-05-09T08:52:00.000-04:00

According to this morning's C-J, U of L's downtown arena would house up to 72 luxury suite boxes. It would be the most luxury suites offered for lease by any arena in the country that does not also feature a professional tenant. The probable price: $75,000-$80,000! I'll take two.

Barbaro Victorious in Derby

2006-05-07T18:30:00.000-04:00

OK, so I didn't pick the winner yesterday, nor did I have the trifecta. My horse, Jazil, began slowly just as I expected, and rallied to tie for fourth. Barbaro paid $14.20, $8.00, & $6.00, while 2nd place longshot Bluegrass Cat paid a hefty $28.40 & $15.40, and 3rd place Steppenwolfer paid $7.80 for the Show.

Next is the Preakness in two weeks. Can't wait.

Break from Real Estate: Derby

2006-05-05T18:34:00.000-04:00

So who do you like? According to the "experts", this year's Kentucky Derby field is rich in talent. Probably best to pick based on your favorit name. There's Sinister Minister & sweetnorthernsaint, and even Lawyer Ron to mediate between the two. Personally, I like Jazil. He's a closer, and would have benefitted from extra distance in the Wood Memorial when he finished 2nd after a furious rally. Churchill offers him that extra, so my money's on him ($2 across the board just to show you how sure I am).

Good Luck!

1st Quarter High Active Prices

2006-05-04T12:05:00.000-04:00

Highest active listing in 40205 is $7,500,000 (I didn't include this in the data!) View it here .
Highest active price in 40205 that I did include is $739,000. View it here.
Highest active price in 40206 is $2,200,000. View it here .
Highest active price in 40207 is $1,975,000. View it here .

1st Quarter 2006 Low Active Prices

2006-05-04T11:51:00.000-04:00

Current low active price in 40205 is $119,900. LISTING
Current low active price in 40206 is $79,400. LISTING
Current low active price in 40207 is $115,000. LISTING

1st Quarter 2006 Active Median Home Prices

2006-05-04T11:37:00.000-04:00

Current median active price in 40205 is $252,000. LISTING
Current median active price in 40206 is$219,000. LISTING
Current median active price in 40207 is $259,000. LISTING

1st Quarter 2006 High Pending Sale Prices

2006-05-04T11:31:00.000-04:00

Current high pending sale price in 40205 is $1,875,000. That's ours!
Current high pending sale price in 40206 is $1,175,000
Current high pending sale in 40207 is $1,427,500

1st Quarter Low Pending Sales

2006-05-04T11:25:00.000-04:00

Current low pending sale price in 40205 is $132,000
Current low pending sale price in 40206 is $89,500
Current low pending sale price in 40207 is $139,500

1st Quarter Median Pending Home Sales

2006-05-04T11:12:00.000-04:00

Current median pending home price in 40205 is $239,900
Current median home price in 40206 is $205,900
Current median pending home price in 40207 is$224,950

1st Quarter High Home Sales: 2005 vs. 2006

2006-05-04T11:02:00.000-04:00

1st Quarter 2006 high sale price in 40205 sold for $688,302
1st quarter 2005 high sale price in 40205 sold for $825,000
1st Quarter 2006 high sale price in 40206 sold for $510,000
1st Quarter 2005 high sale price in 40206 sold for $420,000
1st Quarter 2006 high sale price in 40207 sold for $675,000
1st Quarter 2005 sale price in 40207 sold for $850,000

1st Quarter Low Home Sales: 2005 vs. 2006

2006-05-03T17:07:00.000-04:00

1st Quarter Low sale price 2006 in 40205 sold for $110,000
1st quarter Low sale price 2005 in 40205 sold for $101,500
1st Quarter Low sale price 2006 in 40206 sold for $68,800
1st Quarter Low sale price 2005 in 40206 sold for $21,600 (!)
1st Quarter Low sale price 2006 in 40207 sold for $129,000
1st Quarter Low sale price 2005 in 40207 sold for $136,000

1st Quarter Median Home Sales: 2005 vs. 2006

2006-05-02T16:51:00.000-04:00

1st Quarter Median sale price 2005 in 40205 zip sold for $$186,250
1st Quarter Median sale price 2006 in 40205 zip sold for $190,000
1st Quarter Median sale price 2005 in 40206 zip sold for $165,500
1st Quarter Median sale price 2006 in 40206 zip sold for $174,750
1st Quarter Median sale price 2005 in 40207 zip sold for $208,450
1st Quarter Median sale price 2006 in 40207 sold for $198,000

So How are We Doing?: 1st Quarter Numbers

2006-05-02T15:28:00.000-04:00

With all the housing bubble talk, I thought I'd take a look at a couple of areas in the Louisville market to see how the so-called bubble is affecting our local market. For examination, I've chosen three traditional zip codes that, if there is a bubble, it is most likely to affect these areas. The zip codes: 40205 (Highlands/Douglass Loop Area), 40206 (Crescent Hill), 40207 (St. Matthews/Brownsboro Rd.).

Here's what I found:

I looked at the first quarter of 2005 for total sales, average sale price, median sale price, low sale price, high sale price, and average days on market for the three zip codes. Then I did the same for the first quarter 2006. I then looked at current active inventory & pending sales.

40205: 1st quarter 2005
Sales: 70
Avg Sale Price: $224,406
Median: $186,250
Low: $101,500
High: $825,000
Avg DOM: 59

40205: 1st quarter 2006
Sales: 67
Average Sale Price: $209,011
Median: $190,000
Low: $110,000
High: $688,302
Avg DOM: 59

40205: Active Inventory
Total: 108
Avg Asking: $279,332
Median Asking: $251,000
Low Asking: $119,900
High Asking: $739,000*

40205: PENDING Sales
Total: 42
Average Price: $320,016
Median Price: $239,900
Low: $110,000
High: $1,875,000

40206: 1st quarter 2005
Sales: 42
Avg Sale Price: $188,919
Median Sale Price: $165,500
Low: $21,600
High: $420,000
Avg DOM: 56

40206: 1st quarter 2006
Sales: 28
Average Sale Price: $183,932
Median: $174,750
Low: $68,800
High: $510,000
Avg DOM: 87

40206: Active Inventory
Total: 84
Avg Asking: $320,522
Median Asking: $219,900
Low: $79,400
High: $2,200,000

40206: PENDING Sales
Total: 13
Average Price: $280,223
Median Price: $205,900
Low: $89,500
High: $1,175,000

40207: 1st quarter 2005
Sales: 93
Avg Sale Price: $271,999
Median Sale Price: $208,450
Low: $136,000
High: $850,000
Avg DOM: 56

40207: 1st quarter 2006
Sales: 73
Average Sale Price: $220,741
Median Sale Price: $198,000
Low: $129,000
High: $675,000
Avg. DOM: 71

40207: Active Inventory
Total: 137
Avg Asking: $365,555
Median Asking: $262,500
Low: $115,000
High: $1,975,000

40207: PENDING Sales
Total: 53
Average Price: $351,774
Median Price: $224,950
Low: $139,500
High: $1,427,500

*=There is a large one-of-a-kind estate home currently on the market in this zip for $7,500,000, but in order to keep from skewing the data too terribly, I did not include it.

Pending sales appear encouraging with regard to average price figures which are sure to drop some upon closing, but there's definitely a bit of a slow down. I'll be following up with a 2nd quarter update on these zips as well to see where we stand at mid-summer. My initial reaction is that there are less motivated buyers in the market at this time. Some of that is undoubtedly due to interest rate increases & as a reation to much of the negative publicity the housing market is receiving. There's no question that the national housing market is softening & has been for a few months. It will be interesting to see how low to mid-level markets fair as we head into peak buying time. Also, I'll be posting a few pictures of some of the houses included in this sample.

Priciest Zip Codes Ranked by Forbes

2006-04-27T11:26:00.000-04:00

Forbes Ranks Most-Expensive ZIP Codes(April 25, 2006) --

The list of the 500 most expensive ZIP codes compiled by Forbes.com is based on the highest median home prices in the country.

The ZIP code 11962 topped the list, as the median price in Sagaponack, N.Y. — located in the Hamptons — reached $2.8 million in 2005.

More than 50 percent of the 500 priciest ZIP codes were in California, and 20 percent were in New York. The remainder were mainly in Massachusetts, Connecticut, Arizona, Maryland, and Florida.

A few of the upscale ZIP codes belong to urban areas; but most are on the coast or in the mountains, with breathtaking views, spacious estates, country clubs, golf courses, and other luxury amenities.

Source: MSNBC, Sara Clemence (04/24/06)

Downtown Arena Authority Vote

2006-04-20T08:23:00.000-04:00

The Riverfront site at Second Street & Main in downtown Louisiville remains lawmakers' choice for Louisville's downtown arena, but John Schnatter & David Jones, Sr. think there's a better way.

No matter the site, the arena must be built. Too much hinges on its completion. Downtown's vitality is higher than it's been in decades, and so much of that momentum has been gained from the promise of this arena.

Auction: Grand Crescent Hill Victorian

2006-04-18T10:48:00.000-04:00

Some houses attract all kinds of curiosity. Some garner attention for being uniquely an eye-soar, however, some for being uniquely gorgeous. This 19th Century Crescent Hil Victorian located on Hite Avenue falls into the latter category. If ever a house should be auctioned, this is it.

What: Auction of historic Crescent Hill Victorian
When: Saturday, April 22, 2006, 10:00 a.m.
Where: 131 N. Hite Ave.

Downtown Louisville's Waterfront Park Update

2006-04-18T10:33:00.000-04:00

The final piece of the immaculate Waterfront Park in downtown Louisville will be closed on Thursday, however, according to this C-J blip more funding is needed to improve the parcel of land consistent with what has already been developed. This final phase includes the walking bridge conversion from the currently abandoned railroad bridge. Given the fact that the conveyance of the land is nearly finalized, I'd say funding to complete the project will be secured.

Assassin's Boyhood Home Still Needs a Buyer

2006-04-17T14:20:00.000-04:00

No Bidders for John Wilkes Booth's House(April 14, 2006) --

The Bel Air, Md., boyhood home of Abraham Lincoln assassin John Wilkes Booth failed to sell at auction yesterday.

Only 25 people showed up and only two were registered bidders. The auctioneers started the bidding at $875,000, but it dropped quickly until it hit $805,000 and was withdrawn.

The seller Robert Baker and his wife Beth, who own a landscaping business, bought the house at auction in 1999 for $415,000. The owners say they will now rely on a real estate professional to sell the property.

Source:[ The Baltimore Sun], Justin Fenton (04/13/06)

Ed.'s Note: Good luck is all I have to say. Not sure how the history regarding this particular house will serve its sales success.

City Seeking Restoration of Historic Dwelling

2006-04-14T15:45:00.000-04:00

Anyone up for a fixer-upper? If so, the restoration of this 1860s mansion could keep a handy-man busy for quite awhile.

Downtown Marriott a Success

2006-04-14T15:44:00.000-04:00

From today's C-J, the hotel chain's downtown location is doing well for itself, in addition to doing well for other downtown hotels & the downtown area in general.

Local Blog is a Feast for All Things "Louisville"

2006-04-13T14:51:00.000-04:00

Granted, I write a predominantly "Real Estate-Themed" blog that attempts to focus mostly on real estate in Louisville, KY. However, I'd like to direct anyone interested in finding out more about the "guts & insides" of this city to visit a great local blog: Louisville's Water Cooler also better known as morethanderby.com. There you'll find lots of interesting info on a variety of topics that shape our city. Differing viewpoints abound, it's great fun, and it's run by blog champions Todd Earwine & Rob May among others.

Affordable Housing Alert: Get Out of L.A.

2006-04-13T14:36:00.000-04:00

Half Million Dollars Doesn't Buy Much in L.A.(April 13, 2006) --

If you're looking for an affordable home, steer clear of Los Angeles. Southern California continues to be one of the most expensive places in the country to buy a house, new research shows.

Median prices in Los Angeles County passed $500,000 for the first time last month, according to DataQuick Information Systems, which analyzes property transactions. In March, the median hit $506,000, up 15 percent from a year earlier and 3 percent from February.

Orange and Ventura counties' medians sailed through the $600,000 level in the middle of last year, and San Diego's broke through the $500,000 point last fall.

$500,000 doesn’t buy a palace. Forget Beverly Hills. It might get you 1,500 square feet with three bedrooms and two baths in South Los Angeles.

To buy a house at the median price, a household would need an annual income of at least $120,000 to qualify for conventional financing with a 20 percent down payment. The Los Angeles County's median household income is $47,000.

Source: Los Angeles Times, Annette Haddad (04/13/2006)

Ed.'s Note: That statistic at the bottom of the paragraph is an interesting one, isn't it? My question remains, who then is buying up all these median priced homes in the $500,000 range? If they're merely priced there, then the situation will work itself out, but if they're also selling there, then to whom?

Here's an Idea for old Central State Hospital

2006-04-13T14:19:00.000-04:00

Developers Turn Old Asylums Into New Homes(April 13, 2006) --

Despite their sometimes spooky histories, former hospitals for the mentally ill are finding new life as condominiums, apartments, and townhomes.

The former Danvers State Hospital in Massachusetts was once called “the scariest building in the world.” But today there’s not much left to be frightened of — except for the pricey rents of $1,400 a month.

Rents are even pricier at the former New York City Lunatic Asylum on Manhattan’s Roosevelt Island. Studio apartments start at $1,700.

And in Oregon, more than 600 people signed up for the first 60 homes built on the site the former Dammasch State Hospital, south of Portland, where the smallest townhouses sell for $250,000.

Source: Associated Press, Ken Maguire (04/12/2006)

Tax Time: Mortgage Rate Deduction a Nice Break

2006-04-12T09:58:00.000-04:00

Mortgage Interest Deduction Can Save Taxpayers Big(April 11, 2006) --

Believe it or not, home owners frequently don’t itemize deductions and as a result, they could be overpaying their federal taxes by as much as $1 billion a year.

The Government Accountability Office, the research arm of Congress, reports that about 2.2 million home owners last year took the standard deduction on their tax returns rather than itemizing deductions. They paid $945 million more in federal taxes than they needed to.

Home owners may not think they have enough write-offs to overcome the standard deduction. But if their mortgages are large or fairly new, they're probably wrong, says Larry Cox, owner of several Jackson Hewitt Tax Service franchises in the Denver area.

Why overlook this government gift? Some do-it-yourself taxpayers find itemizing deductions daunting; others may not have enough deductions to offset the increasingly generous standard deduction, speculated CPA Robert Burke of Jacksonville, Fla.

Source: Denver Post, Aldo Svaldi (04/09/06)

Replacing Old with New

2006-04-11T14:30:00.000-04:00

The former site of the Clarksdale Public Housing Project is getting a new face. The row of rundown brick apartments along Clay Street on the fringe of downtown Louisville is being transformed into Liberty Green, an ecclectic mix of new lofts, apartments, townhomes, & single family homes.

New Listing: Strathmoor Village

2006-04-11T12:43:00.000-04:00

Please click here to view more details of this portrait of curb appeal!

Thinking about Selling?

2006-04-06T12:23:00.000-04:00

If you're one of the many who will attempt to sell their home this spring, everyone seems to have an opinion on what improvements or repairs should be made prior to listing the property. It's been my experience that the first $500 a seller spends in preparing his or her home for marketing that can be the biggest value-builder.

Some inexpensive ways to help your home stand out in a somewhat bloated market:

Clean the clutter. Eliminate anything that appears to crowd your home. Reduce the amount of furniture in smaller rooms. Organize closets & reduce their contents.
Clean the dirt & grime. This includes having windows & floor coverings professionally cleaned. I can't tell you how many homes I've shown that these steps haven't been taken, and what could be & probably is a perfectly good home shows poorly & gives the potential buyer the feeling that there's more wrong with it than its cleanliness.
Manicure the landscaping. No need to go nuts & plant a flower garden, but instead improve on what is already in place. Minimal landscaping is fine as long as it is neat in its appearance.
Have systems (electical, HVAC) examined/serviced by a professional.
Patch, paint, & repair. Walls, floors, moldings, cabinets, counters, etc. can be made to look passable, if not great, with just a little work. Rarely do I recommend replacing floor coverings, counters, cabinets, etc. but again, take what is in place, and make it look outstanding.
Ask your real estate professional if decor is fairly neutral or appealing to the profile of the potential buyer for your property. Most people think they should paint all the walls neutral. I disagree to a point. If your decor is fairly recent & not terribly bold, then keep it & shape it up to look brand new. Also, just because your decor is deemed "bold" by some, depending on what the likely profile of the buyer is for your house, you might want to keep it. That's why it's important to ask your agent what works & what doesn't.

If you're willing to spend around $500 in readying your home for sale, and you do it intelligently & with qualified guidance, you will probably realize thousands more in equity, and your house will sell much faster.

If you have further questions, please email me at cthomas@mulloyproperties.com

New Law Regarding Electrical Work on Personal Residences

2006-04-06T12:21:00.000-04:00

This C-J blip outlines what electrical work requires a permit & what doesn't with regard to one's personal residence.

Condos/Patio Homes Picking Up Steam

2006-03-29T12:57:00.000-05:00

At least as far as requests for building permits are concerned, the trend to live hassle-free in a condo or patio home is increasing in popularity. More...

A Cheap Way to Improve Your Home's Appearance

2006-03-04T13:13:00.000-05:00

According to this C-J article, interior paint is a great way to improve your home's look. Well, duh! I just had to remark about the super-simplified title, but it's an otherwise insightful piece about what's new in paint.

A Cheap Way to Improve Your Home's Appearance

2006-03-04T13:12:00.000-05:00

First Lady Calls for Preservation of Portland Neighborhood

2006-03-02T11:14:00.000-05:00

The West End's Portland neighborhood was tagged by First Lady, Laura Bush to receive matching funds regarding initiatives targeting the area's preservation. Read more here.

Home Sales Update from NAR

2006-03-01T13:03:00.000-05:00

NAR: January Existing-Home Sales Ease( February 28, 2006) --

Sales of existing homes were down in January while home prices continued to appreciate at double-digit rates, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.8 percent to a seasonally adjusted annual rate1 of 6.56 million units in January from an upwardly revised pace of 6.75 million in December. Sales were 5.2 percent below the 6.92 million-unit level in January 2005.

David Lereah, NAR’s chief economist, said sales are tracking the trend in the association’s Pending Home Sales Index. “Our leading indicator, based on pending sales, has been trending down since hitting a record last August,” he said. “In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they’ll maintain a historically high pace.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in January, down from 6.27 percent in December; the rate was 5.71 percent in January 2005. In November, the 6.33 percent fixed rate was the highest in over three years.

The national median existing-home price2 for all housing types was $211,000 in January, up 11.6 percent from January 2005 when the median was $189,000. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Thomas M. Stevens from Vienna, Va., said home prices continue to show the long-term effects of tight supply. “Although housing inventory levels have been improving, it is far from being a buyer’s market in most of the country and we see the momentum of double-digit appreciation being sustained in home prices,” said Stevens, senior vice president of NRT Inc. “Even when home sales slow, they still supply solid returns. The longer you own, the bigger the gain.”

Total housing inventory levels rose 2.4 percent at the end of January to 2.91 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.Single-family home sales dipped 1.5 percent to a seasonally adjusted annual rate of 5.77 million in January from an upwardly revised 5.86 million in December, and were 4.8 percent lower than the 6.06 million-unit pace in January 2005. The median existing single-family home price was $210,500 in January, up 13.1 percent from a year earlier.

Source: NAR

Ed.'s Note: Mr. Stevens hit the nail on the head when he remarked, "The longer you own, the bigger the gain." The ability to make quick money on as grand a scale as we've been seeing in the last few years may be waning, but for homeowners purchasing for owner-occupation or rental income, the news is good. As the market softens, smart investors will likely look for good deals and hold property for rental income.

New Albany is a Good Place for a Bargain

2006-03-01T11:22:00.000-05:00

According to this C-J article, New Albany offers updated historic properties at a very "un-Louisville" kind of price. Get web access to these properties here.

New Downtown Grocery Set to Open

2006-02-28T13:05:00.000-05:00

Timing is important, and this is an idea, in my estimation, whose time has come. Market on Market is set to open Wednesday, March 1. Assuming it can get by for a year or two, the outlook is promising. I have a feeling in a couple of years, however, many entrepreneurs will look back at opening a downtown grocery as the one that got away. It is located near Mercantile Gallery Lofts & the Main Street corridor where there is no shortage of new development.

More Art for Downtown

2006-02-15T15:12:00.000-05:00

Located at 100 E. Main St., a new 24-hour a day art exhibition space is scheduled to be ready in September. The Main Street corridor continues to fill up. Very exciting stuff!

More on Museum Plaza

2006-02-14T09:29:00.000-05:00

From the Courier-Journal

Busy Week for Downtown Louisville

2006-02-13T12:36:00.000-05:00

There's ambitious news regarding the new development, Museum Plaza, but as this Business First article also notes, there are arena & bridge issues that make those of us hopeful for continued downtown revitalization progress to wonder how serious our great city is on the subject.

Urban Living Picking Up Steam

2006-02-03T15:00:00.000-05:00

More People Moving Downtown( February 3, 2006) --

Even before the housing boom of the past few years got underway, the downtowns of U.S. cities were welcoming more residents.

After declining for 20 years, the Brookings Institution reports that the population in these center cities picked up 10 percent during the 1990s. More people between the ages of 25 and 34 took up residency in downtown markets, and the racial and ethnic composition of downtown residents became more diverse over time.

Today, more downtown dwellers are college graduates and home owners. The downtown areas that experienced the greatest level of growth during the previous decade include Seattle, with expansion of 76.9 percent, followed by Denver; Colorado Springs, Colo.; Albuquerque, N.M.; Portland, Ore.; San Francisco; Cleveland; Miami; and Chicago.

Tops among the downtown markets with the greatest home ownership rates as of 2000, meanwhile, was Chicago — where 40.7 percent of residents own their homes. The Windy City was followed in this category by Lafayette, La.; Denver; Austin, Texas; Miami; Philadelphia; Norfolk, Va.; Charlotte, N.C.; and Baltimore.

Investor's Business Daily (02/03/06)

Ed.'s Note: This is exciting news. Louisville is experiencing downtown residential success as well. Conversions from commercial or old apartment space is underway in several spots downtown.

Also, highrise luxury condos are emerging with Ohio River views. The success of one such new development is being measured now. Waterfront Park Place is an exciting upscale condominium community located at the corner of Floyd & Witherspoon Streets near the Great Lawn in downtown Louisville. A variety of prices, sizes, styles, & finishes populate this work in progress. Currently, there are 24 units available according to the local MLS system ranging in price between $397,500 for a one bedroom & $2,020,000 for a custom designed penthouse in which the purchaser receives license to choose the number of beds & baths with a built-in budget of around $140,000 for finishes.

More affordable versions of urban living can be found at 626 E Main, a conversion that is in process. The style modern with 15 foot exposed ceilings, steel beams, exposed furnaces, stainless steel kitchen appliances, light maple cabinetry, granite tops, earthy tiled baths, & hardwood floors. Prices vary, and creativity is encouraged in order to showcase a signature look.

Another option is The Mercantile Gallery Lofts located on East Floyd Street within walking distance to the Louisville Central Business District. There are a variety of floorplans from which to choose, and most are fairly efficient in size. Currently under construction, I do not currently have pricing information.

Given our downtown location, the revitalization efforts in Louisville are exciting to see. Please don't hesitate to contact me about these or other possible developments in progress.

Housing Affordability: Alternate View

2006-02-02T14:00:00.000-05:00

Homes Got More Affordable Over Past Decade( February 1, 2006) --

Is the nation really facing a housing affordability crisis? According to Moody's Economy.com, the opposite is true: Houses have become more affordable over the last decade because of low interest rates, rising incomes, and an increased supply of housing.

The percentage of income needed to cover mortgage payments in the United States has declined, on average, from about 30 percent in 1982 to about 22 percent in 2005, Economy.com reports.

Nationwide, only a few areas are really unaffordable. Those include California coastal areas, Chicago, Boston, and metropolitan New York. In these areas the percentage of income required to buy a house exceeds 40 percent, Economy.com figures.

Source: Newsday, Clifford Sondock (1/31/06)

New Louisville Website Offers More Info

2006-02-01T15:37:00.000-05:00

According to this Business First article, the site will offer residents access to more services & information.

You can access the site by clicking http://louisvilleky.gov/ .

Louisville Ranks 31st Nationally...

2006-02-01T15:32:00.000-05:00

...among hottest U.S. cities for relocation and/or expansion according to Business First .

HELOCs Dwindling

2006-01-31T19:55:00.000-05:00

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)

Investors: It's Tax Season

2006-01-31T19:52:00.000-05:00

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)

FHA Helps Fixers

2006-01-31T13:31:00.000-05:00

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)

Scouting for Safe Neighborhoods

2006-01-31T13:28:00.000-05:00

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)

Popularity of Propane On the Rise

2006-01-31T13:26:00.000-05:00

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)

December Positive for New Home Sales

2006-01-31T13:24:00.000-05:00

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)

Design Whiz Discusses Kitchen/Bath Remodeling

2006-01-28T10:53:00.000-05:00

From today's C-J