Wealthy Investors Are Eyeing Real Estate
The wealthier the investor, the more money they plan to put in real estate compared to the amount they have earmarked for stocks and bonds, according to Barclays Plc global survey. Investors believe real estate will yield better returns.
Twice as many people with more than $800,000 to invest plan to increase their investment in commercial and residential property compared to those who plan to reduce it, Barclay’s study reported.
Overall, investment in real estate among wealthy individuals is set to rise to 30 percent of the average portfolio from 28 percent now, according to the survey. That excludes properties used as a principal residence.
Foreclosures Decline for Fourth-Straight Month
Foreclosures declined 8 percent in November compared with October, but were still up 18 percent from November 2008.
This was the fourth-straight month that U.S. foreclosures have declined since hitting an all-time high in July, according to online foreclosure marketer RealtyTrac.
Default notices, an indicator of coming foreclosures, also were down 8 percent from October, but up 22 percent from November 2008. Bank repossessions were flat from the previous month and down 2 percent from November 2008.
“We don’t really believe the underlying problems have been resolved,” said Rick Sharga, senior vice president for RealtyTrac. Many borrowers, he told the Associated Press, “simply aren’t going to qualify” for government and mortgage servicer help.
States with the highest foreclosure rates are:
* Nevada
* Florida
* California
* Arizona
* Idaho
* Michigan
* Illinois
* Utah
* Maryland
* New Jersey
Four states account for more than 50 percent of actual foreclosures: California, Florida, Illinois, and Michigan.
Housing: Undervalued and Stuck There
Wells Fargo & Co. economists wrote in a note to clients last week, “The calculus of home buying and finance has changed,” summing up succinctly something that is troubling housing experts all over the country.
Housing researcher Global Insight recently released a study of U.S. housing prices that points to the magnitude of the collapse of values.
Nationwide, Global found housing values were about 10 percent undervalued, based on a model that examines interest rates, household incomes, population, and historical price patterns. That’s a modest number compared to metro areas hardest hit by the housing recession.
In Fort Lauderdale, Fla., Global calculated that housing prices were 24 percent undervalued as of the third quarter of 2009. Three years ago, it said the area was 44 percent overvalued. Global calculates that Las Vegas is now undervalued by 41 percent compared to being 33 percent overvalued in 2006.
The trillion-dollar question is: When will things turn around? As long as there is high unemployment and tight credit, many experts believe it won’t be anytime soon.
Will Home Prices Go Down in 2010?
Some real estate researchers are forecasting that home prices will fall again in 2010.
· Fiserv Lending Solutions, a financial analytics firm, predicts that prices will decline an average of 11.3 percent in 342 of the 381 markets it covers.
· Moody’s Economy.com foresees another 8 percent drop, with Arizona, California, Florida, and Nevada feeling even more pain.
· Shari Olefson, author of Foreclosure Nation: Mortgaging the American Dream, predicts a national average decline in prices of about 10 percent in 2010.
· Peter Schiff, president of Euro Pacific Capital and the most bearish of the bears, says real estate prices could possibly fall another 30 percent before they hit bottom.
NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun sees it all differently. He predicts home prices will rise more than 3 percent in 2010.
“The headwind we face is rising mortgage interest rates,” Yun says, “but the compensating factors will be the home buyers tax credit in the first half of the year and increased job creation in the second half.”
FHA Cracks Down on Dubious Lenders
The Federal Housing Administration served subpoenas Tuesday on 15 mortgage companies with high default rates for FHA-backed loans.
The agency has previously taken action against several lenders with questionable records, including Lend America and Taylor, Bean & Whitaker Mortgage Co.
Department of Housing and Urban Development’s Inspector General, Kenneth Donohue said he plans to determine why these 15 lenders had so many loans that defaulted shortly after they closed.
Troubled lenders include: First Tennessee Bank N.A, of Memphis, Tenn.; Alethese LLC, of Lakeway, Texas; Security Atlantic Mortgage Co., of Edison, N.J.; Pine State Mortgage Corp., of Atlanta; Birmingham Bancorp Mortgage Corp., of West Bloomfield, Mich.; Alacrity Financial Services LLC, of Southlake, Texas; Assurity Financial Services LLC, of Englewood, Colo.; D and R Mortgage Corp., of Farmington, Mich.; Webster Bank, of Cheshire, Conn.; Mac-Clair Mortgage Corp., of Flint, Mich.; Americare Investment Group Inc., of Arlington, Texas; 1st Advantage Mortgage, of Lombard, Ill.; American Sterling Bank, of Independence, Mo.; Sterling National Mortgage Co., Inc., of Great Neck, N.Y.; and Dell Franklin Financial LLC, of Columbia, Md.
John Courson, CEO of the Mortgage Bankers Association, applauded the crackdown. “We’re concerned about the viability of the program and we want to make sure that the bad apples and the bad players, frankly, are eliminated,” he said.
