Waller, TX Real Estate Blog

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 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.

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.

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.”

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.

Forbes housing reporter and analyst Francesca Levy makes some thought-provoking predictions in the latest issue of the magazine.

She predicts:

* Real estate will be an attractive investment strategy in 2010 with wealthy investors devoting an increasing segment of their portfolios to it.
* Loan modifications will result in more people who should probably be facing foreclosure slipping deeper into debt.
* Cities like Omaha, Neb., and Buffalo, N.Y., which avoided the housing bubble and most of the bust, will be models for cities trying to avoid another bubble.
* Financial troubles in Dubai will ripple through the U.S. luxury market, creating energy in a market that has been stagnant.

Falling prices for real estate and the declining value of the dollar are luring investors from all over the world to purchase properties for as little as half what they might have paid four years ago.

“This could be a once-in-a-generation opportunity for real estate investment,” says Arthur Wong, whose Calgary, Alberta-based U.S. Real Estate Fund has invested $5 million in properties in the U.S. Southwest and plans to buy millions more.

Buyers from countries like Brazil, Canada, France, and the Netherlands, whose currencies are particularly strong against the dollar, are spending millions on luxury condos in New York City, Las Vegas, and Miami. Foreign buyers also find the warm climates of California, Texas, and Arizona attractive.

Peter Zalewski, a principal with Miami-based Condo Vultures, says he has sold foreign condo buyers seven bulk deals in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela.

Fannie Mae announced Tuesday that it has launched several initiatives designed to stabilize neighborhoods and promote purchases by owner occupants and low-income buyers.

Fannie Mae’s “First Look” initiative offers buyers who intend to live in the home, particularly low-income buyers, an opportunity to make an offer during the first 15 days the property is on the market. Investors can only make an offer after the first 15 days have passed.

Other programs aimed at stabilizing neighborhoods include:

• Deposit Waivers. Fannie Mae will waive the earnest money/deposit requirement for public entities using public funds to purchase a Fannie Mae-owned property. Individual home buyers who have qualified for public funds and want to purchase a Fannie Mae-owned property do not have to meet the usual earnest money/deposit requirement either. Deposits for these buyers can be as low as $500.
• Reserved Contract Period. Upon receipt of an acceptable offer, buyers have the ability to renegotiate their offer after obtaining an appraisal.
• Extra Time for Closing. Buyers receive up to 45 days to close – 15 days more than is usually permitted for purchases of Fannie Mae-owned properties.

Source: Fannie Mae (11/24/2009)

Some U.S. cities with stable housing and diversified employment have been virtually untouched by the Great Recession.

Analysts say cities that are most likely to leave the recession in the same or better condition than they started it are those where home prices didn’t fluctuate wildly, which spared them the devastating effects of foreclosure, lost jobs, and lost productivity.

If there is a lesson to be learned, experts say, it is that families looking for long-term economic stability should settle in locales with diverse employment and minimal shifts in housing values.

To identify these cities, Forbes magazine ranked the 100 largest Metropolitan Statistical Areas by employment rates, the conventional mortgage home price index, and the average days on the market for properties currently for sale.

The top cities on Forbes list were:

• Omaha/Council Bluffs, Neb.
• San Antonio, Texas
• Austin-Round Rock, Texas
• Pittsburgh
• Harrisburg/Carlisle, Pa.
• Dallas/Fort Worth
• Rochester, N.Y.
• Houston
• Raleigh/Cary, N.C.
• Baton Rouge, La.

Source: Forbes, Francesca Levy (11/19/2009)

More than 23 percent of people with mortgages owe more on their properties than they are worth, according to a report released Tuesday by research firm First American CoreLogic.

Another 2.3 million homeowners are within 5 percent of being underwater, bringing the total of those who are upside down or close to it to about 28 percent.

About 5.3 million U.S. households have mortgages that are at least 20 percent higher than their home’s value, the First American report says. Borrowers owing more than 120 percent of their home’s value are the most likely to default, First American calculates.

The majority of underwater mortgages are in the following states:

1. Nevada: 65 percent of home owners are underwater
2. Arizona: 48 percent
3. Florida: 45 percent
4. Michigan: 37 percent
5. California: 35 percent

The report also notes that most U.S. homeowners have home equity, and nearly 24 million owner-occupied homes don’t have any mortgage at all, according to the U.S. Census Bureau.