Fewer Short Sales Come Up Short

While obstacles to short sales remain, real estate practitioners say the process is becoming more efficient. Rather than waiting six months or more to push through a deal, agents say banks are more willing to negotiate prices up front.

"My gut feeling is that short sales seem to be the preferred avenue for distressed property now," says Cindi Hagley of San Ramon, Calif.-based Windermere Welcome Home. "It's cheaper for [banks] to do a short sale than go all the way to foreclosure."

The short-sale process has become more manageable now that banks are willing to pre-approve prices, reach out to underwater borrowers who have listed their homes for sale, implement Web-based systems that manage the short sale process, and add staff dedicated to short sales.

Additionally, the U.S. Treasury is set to implement a streamlined short sales framework and offer incentive payments of $1,500 to home owners and $1,000 to both loan servicers and second-lien holders.

Borrowers also prefer short sales because Fannie Mae requires them to wait only two years to own another home or even less than that if they were not delinquent. By contrast, those who lost their homes to foreclosure have to wait five years.

Source: San Francisco Chronicle, Carolyn Said (10/21/09)

A Historic Time to Buy

Young people just starting to invest and buying their first homes are potentially the winners in this recession.
First-time homebuyers, most between the ages of 25 and 45, accounted for about 45 percent of home sales from January through July 2009, according to the National Association of REALTORS®
"This is a historic time," says George Jaramillo, a 35-year-old business analyst in Atlanta, who recently bought three homes, two of them foreclosures. "It's a great opportunity to make some great gains in the future."
A study by investment company T. Rowe Price points out that investing when prices are low can result in amazing gains. For instance, between 1970 and 1990, the annualized rate of return for the S&P 500 was 11.5 percent.
"We need to be shouting from the rooftops that this is not the time to get out of the market if you're young," says Christine Fahlund, a senior financial planner with T. Rowe Price. "This is the time to be in the market."
Source: The Associated Press, Chip Cutter (10/05/2009)

Manhattan Prices Fall Year-Over-Year

It is unclear what direction Manhattan real estate prices have moved in during the past three months, but there is no argument that they have fallen significantly in the last year.

Miller Samuel says prices have declined 8.4 percent year-over-year. Halstead Properties and Brown Harris Stevens reported a 14 percent decline. Corcoran Group reported an 18 percent decrease.

"The interesting thing about this was that lower prices drove people back into the market," says Pam Liebman, CEO of Corcoran.

Bill Staniford, CEO of PropertyShark.com, says, "There's still plenty of money sitting on the sidelines … The biggest problem is obtaining financing."

Jonathan Miller of Miller Samuel echoes that. "Underwriting requirements are the most stringent I've ever seen," he says.

Source: CNNMoney.com, Les Christie (10/02/2009)

Which Cities Will See Biggest Rebound?

Which cities are likely to be the hottest post-economic downturn destinations for young, brilliant, and highly mobile workers?
The Wall Street Journal surveyed six trend-spotting experts and they chose cities based on economic diversity, lifestyle and their own personal prejudices.
Here’s the top-10 list:
1. Washington, D.C. (tie)
1. Seattle
2. New York
3. Portland, Ore.
4. Austin, Texas
5. San Jose, Calif.
6. Denver
7. Durham, N.C.
8. Dallas
9. Chicago
10. Boston
Source: The Wall Street Journal, Sue Shellenbarger (09/30/2009)

Buying a Foreclosure Is No Picnic

Buyers seeking a foreclosed property should realize that not every foreclosure is a good deal.

Urge would-be buyers of foreclosures to have the property thoroughly inspected, says Dan Steward, president of the Tampa-based inspection firm, Pillar to Post. Lenders are not held to the same disclosure requirements as sellers.

Steward says damage isn’t always obvious. While it doesn’t take an expert to see that a toilet has been ripped out, it does require someone with knowledge to know that ripping it out damaged a pipe 20 feet down the line.

The best way for the buyer to get the property is to follow the bank’s instructions closely, says Ryan Melvin, co-owner of More Realty Group in Las Vegas, which specializes in foreclosures.

Another quirk that sometimes surprises buyers of real-estate-owned properties, or REOs, is the scrutiny that banks place on the buyers' credit, even though they are using a different lender.

Source: The Wall Street Journal, Amy Hoak (09/27/2009)

Signaling Confidence, Fed Holds Rates Steady

In an announcement that should bolster the housing industry, the Federal Reserve said Wednesday that it intended to keep key lending rates near zero "for an extended period" and continue to buy mortgage-backed securities and debt through March 2010.

That’s the second time the Fed has decided to stretch out its program to encourage spending and stimulate the economy.

Economists predict that the Fed will keep the key lending rate near zero into the first quarter of next year. Holding that rate low means that consumer loans, including mortgages, home-equity loans, and credit-card rates, remain at the lowest point in decades.

Greg McBride, senior financial analyst at Bankrate.com, warned that these low rates will eventually head higher and said home owners interested in refinancing should realize that "it could be a different story 12 months from now," with much higher rates for 30-year fixed-rate mortgages.

Source: The Associated Press, Jeannine Aversa (09/23/2009)

Commercial Prices Fall as Vacancy Rates Rise

The value of commercial property is being driven by vacancy rates—the higher the vacancy rate, the lower the price.
At the height of the boom, a high vacancy rate was sought after because the buyer could fill the space and raise rents. Today, finding tenants is a major challenge in many areas and buyers will pay more if a building has guaranteed tenants for the long term. Robert Von Ancken, the senior appraiser for Grubb & Ellis in New York, estimates that substantial vacancies cost a seller as much as 30 percent of value.
“Investors today are very hesitant to make a mistake by underwriting improvement, decreasing vacancy, or increasing rent,” says Scott A. Singer, the executive vice president of the Singer & Bassuk Organization, a New York company that arranges financing.
Source: The New York Times, Terry Pristin (09/15/2009)