Daily Real Estate News | August 30, 2007

Markets Where a Flipper Can Make a Buck

Flipping went out of fashion last year, leaving thousands of flippers in trouble in many areas, but an analysis by Forbes magazine shows that there are markets all over the country where investors can still turn a profit if they pick their properties wisely.

Forbes calculated whether a market is ripe for flipping by using data from Moody's Economy.com to calculate a market's rate of sales against inventory, and to determine supply and demand. Then it looked at current and new-home construction numbers through the end of 2008, based on data from the National Association of Home Builders; the magazine sought out markets where planned new home construction is low.

Then Forbes used price appreciation data from the NATIONAL ASSOCIATION OF REALTORS® to get a sense of short-term market direction. Finally, it examined Moody's figures on investor share. The higher the share of investors, the more sellers outweigh buyers, which is bad news in a bearish market.

The results identified the following markets as the best candidates for flipping. Here are the best markets, along with the price in each market that would make a home a candidate for a quick turnover.

1. Seattle, $385,000
2. San Francisco, $759,000
3. Raleigh, N.C., $225,000
4. Houston, $150,000
5. Austin, Texas, $175,000
6. San Antonio, $150,000
7. Boston, $389,000
8. Los Angeles, $590,000
9. New York, $489,000
10. Portland, Ore., $295,000

Source: Forbes, Matt Woolsey (07/26/2007)

Daily Real Estate News | August 30, 2007

Lead-Based Paint Still a Serious Concern

Highly toxic lead-based paint was banned in 1978 but remains in about 24 million housing units, says the Centers for Disease Control and Prevention.

In 1992, Congress passed a law requiring the EPA to write a regulation that would implement mandatory training for renovation contractors. The EPA didn’t even propose the regulation until 2006 and hasn’t yet adopted it.

EPA spokeswoman Enesta Jones says the EPA is currently gathering and reviewing feedback about its proposed "Lead Renovation, Repair, and Painting Program" and hopes to issue a final rule by early 2008.

Under the EPA's proposed regulations, contractors working in most pre-1978 homes would be trained in the use of lead-safe work practices; renovators and firms would be certified; and training providers would be accredited.

The EPA recommends that anyone renovating a home built before 1978 test their home for potential lead hazards. The agency also warns against using belt sanders, propane torches, high-temperature heat guns, dry scrapers or dry sandpaper because they could create lead dust and fumes.

Work areas should be sealed off completely.

Once the renovation is complete, a clearance examination performed by a contractor is necessary to check for harmful levels of lead-contaminated dust.

Source: USA Today, Angela Haupt (08/29/2007)

Daily Real Estate News | August 29, 2007

Mortgage Applications Decline Even as Rates Drop

Last week was another slow week for the mortgage business with the Market Composite Index, a measure of loan application volume, falling 4 percent on a seasonally adjusted basis to 615.2 from 641.1 the previous week.

On an unadjusted basis, the index decreased 5.3 percent compared with the previous week, but it was up 10.6 percent compared with the same week one year earlier.

The refinance share of mortgage activity increased to 40.4 percent of total applications from 39.9 percent the previous week.

The average interest rate for 30-year fixed-rate mortgages decreased to 6.41 percent from 6.49 percent. The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.10 from 6.20 percent. The average interest rate for one-year ARMs increased to 6.51 from 5.84 percent.

Source: REALTOR® Magazine Online

Daily Real Estate News | August 28, 2007

Mortgage Ads Send Mixed Messages

Dozens of mortgage lenders have shut down their subprime operations, but you wouldn’t know it from Internet and television advertising where lenders are declaring, "Bad Credit? Call Today!”

"It's been a common feature of advertising," says Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "They offer their products not around interest rates but among monthly payments, ease of access, among 'you're more likely to get a yes with us than with others.' I don't think that has changed in this environment."

Lenders are defending themselves. "It's important to point out that there are loan options available for borrowers with lower credit scores in today's market," Darren Beck, senior vice president of marketing for LendingTree.com, told the Boston Globe.

While there's nothing wrong with lending money to people with bad credit, government officials are concerned about independent mortgage brokers who try to trick people into purchasing properties they can't really afford, says David Nahmias, U.S. attorney for the Northern District of Georgia, who has worked on mortgage fraud cases.

The Federal Trade Commission continues to investigate any cases of lending institutions misleading people with their mortgage-related advertising, says Peggy Twohig, associate director for the division of financial practices at the agency. "It depends on exactly what they say, how they say it, how big and bold things are titled, and what is said in the small print,” she notes.

Source: Boston Globe, Nancy Trejos (08/25/07)

Daily Real Estate News | August 27, 2007

Mortgage Interest Tax Deduction Falls Under Fire

Rep. John Dingell (D-Mich.) recently confirmed his plans to roll out legislation in September to wipe out an existing tax break for owners of large houses.

Under the measure, owners of residences measuring 3,000 square feet or bigger — as many as 8.6 million residential properties nationwide, according to 2003 federal government data — no longer would be able to claim a tax deduction on mortgage interest. Dingell's aim is to discourage wasteful energy use and help curtail pollution tied to climate change.

But housing industry officials warn that the current slump in the sector makes now a particularly challenging time to tinker with the deduction.

Doing so "would have repercussions for the housing market as a whole," according to Mary Trupo, NATIONAL ASSOCIATION OF REALTORS® spokeswoman.

Source: Deseret Morning News (Utah) (08/27/07)

Daily Real Estate News | August 24, 2007

Mortgage Rates Drop to Three-Month Lows

Freddie Mac reported that 30-year fixed home loans moved down this week to 6.52 percent, from 6.62 percent a week ago. That's the lowest level in three months. Meanwhile, interest rates on 15-year fixed mortgages dropped to 6.18 percent from last week's average of 6.3 percent.

Source: San Diego Union-Tribune (08/24/07)

Daily Real Estate News | August 23, 2007

Presidential Hopefuls Weigh In on Credit Crunch

What to do about the credit crunch? How to deal with the lackluster housing market? Those are two hot questions for presidential candidates.

Here’s what the candidates have said about the issue of housing and mortgage credit:

Democrats

• Sen. Joseph R. Biden Jr. seeks hedge fund transparency.
• Sen. Hillary Rodham Clinton (N.Y.) urges more “truth in lending” such as plain-talk, no fine-print disclosures for new home owners.
• Sen. Christopher J. Dodd (Conn.) advocates an end to prepayment penalties and extension of Fannie Mae and Freddie Mac’s role.
• Former senator John Edwards (N.C.) wants to change the bankruptcy laws to allow filers to shed mortgage debt.
• Sen. Barack Obama (Ill.) seeks a federal fund to bail out home owners in foreclosure. The money would come from penalties invoked upon irresponsible lenders.

Republicans

• Former New York mayor Rudolph W. Giuliani doesn’t support government intervention, but does think there should be more transparency in the process.
• Sen. John McCain (Ariz.) suggests more education and some help for those who are in foreclosure because they were misled.
• Former Mass. Gov. Mitt Romney believes the government should simplify the mortgage process, ensure strong oversight and punish those who are “bad actors.”

Source: The Washington Post, Jeffrey H. Birnhaum (08/23/2007)