Tuesday, July 31, 2007

Daily Real Estate News | July 31, 2007

High Home Prices and High Tax Rates Go Together

The parts of the United States where home prices are highest – New York, Boston, Washington, D.C., San Diego, Los Angeles, the San Francisco Bay Area, and Hawaii – are also areas where residents pay the highest taxes.

New York City high-earning residents face a 6.85 percent top state income tax and a 3.65 percent top city tax. That’s before facing a 35 percent federal tax rate. The California state income tax is 9.3 percent, kicking in at $43,500. And for people who make more than $1 million a year, California adds another 1 percent.

As a result, some big-city millionaires are taking their money and moving. Outgoing California millionaires of recent years include Netscape's founder, Jim Clark, who moved to Florida, and eBay's Pierre Omidyar, who moved to Nevada.

Says Rich Karlgaard, publisher of Forbes magazine: “Markets decide house prices. People decide tax rates. I have a hunch we'll see a Blue State tax revolt soon.”

Sources: Forbes, Rich Karlgaard (08/13/2007)

Monday, July 30, 2007

Daily Real Estate News | July 30, 2007

Foreclosures Up 55% in First Half of 2007

There was one foreclosure filing for every 134 U.S. households during the first half of the year, according to RealtyTrac’s midyear report.

The report shows that foreclosure filings — including default notices, auction sale notices, and bank repossessions — rose to 925,986 for the first six months of 2007. That’s an increase of more than 55 percent over the same time last year, and a jump of 30 percent over the last half of 2006.

“Despite a slight drop in June, foreclosure activity shows no sign of slowing down,” says James J. Saccacio, CEO of RealtyTrac, an Irvine, Calif.-based company that manages an online database of foreclosures. “Based on the rate of foreclosure activity in the first half of 2007, we could easily surpass 2 million foreclosure filings by the end of the year, which would represent a year-over-year increase of over 65 percent.”

Nevada, Colorado, California posted the highest foreclosure rates. Nevada’s rate doubled from the prior six months to a total of 25,208 filings — or one filing for every 40 households. Colorado was slightly better, at one filing for every 60 households. Calfironia had the third-highest rate, with one filing per 69 households, but topped the list for the total number of foreclosures filings: 189,560.

Other states in the top 10 include Michigan, Florida, Ohio, Georgia, Arizona, Connecticut, and Indiana. A complete state-by-state listing is available on RealtyTrac's Web site.

Source: RealtyTrac; Irvine, Calif

Daily Real Estate News | July 30, 2007

Survey Digs into Details of International Buyers

International buyers — foreign citizens who legally enter the United States to purchase a home — are making up a growing share of business for real estate practitioners, according to new research by the NATIONAL ASSOCIATION OF REALTORS®.

NAR’s 2007 Profile of International Home Buying Activity shows that a quarter of REALTORS® report more international business in 2006 than five years ago. Nearly one in five respondents sold a home to an international client in the past year, and one-third say they believe foreign retirees are an increasingly important market in the United States.

“Just as many U.S. residents are looking overseas for retirement and second homes, people in other countries are considering a home in this country,” says NAR President Pat V. Combs. As international boundaries of homeownership dissolve, you must stand ready to serve an increasingly diverse and multicultural marketplace, she adds.

The research explored the characteristics of second-home purchases in the United States made by international clients. Here are six of the top findings, which reveal important trends that will help you tap into the expanding international niche:

  • Stronger preference for condos and apartments. In 2006, most international home buyers purchased single-family homes or townhomes, and like most domestic home buyers, they financed their purchase. However, they showed stronger preferences for condos/apartments when compared to U.S. home buyers; 22 percent of international buyers purchased condos/apartments, versus 12 percent of U.S. buyers.
  • More pay in cash. Twenty-eight percent of foreign buyers bought their houses with cash, compared to 8 percent of U.S. buyers.
  • Purchase pricier homes. The median sales price of homes purchased by international buyers was $299,500, which is significantly higher than the U.S. median of $221,900 during the same period.
  • Homes used for vacation, investment. Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase. International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.
  • Buyers from Mexico most prevalent. A third of all international buyers are from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).
  • Florida leads the pack. Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states: Florida (26 percent), California (16 percent), and Texas (10 percent). The South attracted nearly half – 49 percent – of international buyers last year, while 31 percent purchased homes in the West.

For more information, visit NAR’s International department on REALTOR.org.

— REALTOR® Magazine Online

Friday, July 27, 2007

Daily Real Estate News | July 27, 2007

Mortgage Rates Drop This Week

Freddie Mac reports a decrease in the 30-year fixed mortgage rate to 6.69 percent during the week ended July 26 from 6.73 percent the previous week. Interest on 15-year fixed loans recorded a slight decline to 6.37 percent from 6.38 percent.

Meanwhile, the five-year adjustable mortgage rate dipped to 6.3 percent from 6.35 percent, and the one-year ARM tumbled to 5.69 percent from 5.72 percent.

Freddie Mac chief economist Frank Nothaft attributes the decrease in borrowing costs to "market concerns that a further weakening of housing demand this spring will delay any recovery in the sector."

Source: The Wall Street Journal (07/27/07)

Daily Real Estate News | July 27, 2007

Adding Curb Appeal: 6 Ways to Spruce Up the Yard

When a house for sale looks good outside, buyers are more likely to want to come inside, says Barb Schwarz, founder of the International Association of Home Staging Professionals.

Here are some of Schwarz’s suggestions for tidying up the yard.

  • Make it neat and clutter-free. Get rid of children’s toys and limit the number of hanging flower baskets and yard art. "It's far better to have fewer bigger pots than the clutter of smaller hanging pots," Schwarz says. "They just weigh down the house."
  • Mow, weed and edge. “If the yard doesn't look well-manicured, then [potential buyers] feel the home hasn't been well maintained," Schwarz says. If the dog urinated on the yard and killed a portion of it, Schwarz recommends painting it.
  • Trim the greenery. Trim trees from the bottom so they create a canopy but don’t block the view. Trim foundation plantings from the top, so they don’t impede views of the windows.
  • Add color. If there’s no color in the yard, plant something like brightly blooming impatiens along the walkway.
  • In winter, place two small potted evergreen trees on either side of the door to brighten up the entrance. Also, make sure the walkways are clear of ice and snow.
  • Buy a new welcome doormat to dress up the front door.

Source: Newsday, Jessica Damiano (07/27/07)

Daily Real Estate News | July 27, 2007

5 Real Estate Investments to Cash In On

Some investors are becoming cautious of real estate because they have read too many frightening stories in the media, but Business Week magazine’s analysts continue to say that real estate is a key component of investment portfolios.

In this week’s magazine they identify five ways that investors can currently benefit from real estate.

1. International Real Estate Investment Trusts. U.S. REITs are going through a bad patch, says Jay Hutchins, president of Comprehensive Planning Associates in Lebanon, N.H. Instead, he advises clients to buy foreign REITs or mutual funds that are focused on global real estate.

2. Cash investments in commercial space. Office buildings, retail properties, and apartment houses provide stable cash flows, says Michael Kuziw, vice president of asset management at Lenox Advisors in New York City. But such investments require a portfolio of at least $1 million.

3. Invest an IRA in real estate for the long haul. Entrust Northeast, in Verona, N.J., which administers self-directed retirement accounts, allows for a wide range of investments, including first and second mortgages.

4. Consider buying a vacation homes outside of the U.S. For example, consider a country like Panama or Costa Rica where the political situation is stable and prices are affordable.

5. Fractional homeownership. This is gaining popularity and is within the reach of people with moderate incomes. For instance, Private Quarters Club in Fernandina Beach, Fla., and Lake Geneva, Wis., sell access to a three-bedroom luxury villa for 21 days a year for $79,000, plus an annual fee of $4,000.

Source: BusinessWeek Online, David Bogoslaw (07/26/07)

Thursday, July 26, 2007

Daily Real Estate News | July 26, 2007

Commercial Construction Offsets Weak Housing

Commercial construction is partially offsetting weakness from the housing market, says the Federal Reserve's latest beige book, which looks at anecdotal reports of regional economic conditions.

The report shows slight economic growth during the last six weeks, with consumer spending rising at a slow pace in June and July. Higher energy prices and the housing downturn cut into that spending, which hurt retail sales in many of the 12 regions.

Manufacturing was strong on most areas, except for companies that make furniture and other housing related goods.

Rising mortgage delinquency rates and a drop in mortgage demand were seen in a number of regions, including the Philadelphia district; while others, such as the San Francisco Fed, report strong commercial and industrial lending activity.

The Fed's policy makers will take these reports into account when they meet in two weeks to consider interest rates.

Source: Wall Street Journal, Kelly Evans (07/26/07)
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