Amy's Blog

Homescape is a Hit at 2008 NAR Conference

2008-11-13T08:58:42Z

While we here at Homescape are optimistic about the future of the real estate market across the country, we also recognize that these are trying times.

And in today's challenging market, Homescape has become more committed than ever to providing our customers and consumers with a comprehensive set of online marketing tools that effectively drive traffic and leads back to the real estate professional and the listings. With over 3 million home listings, Homescape will continue to be a leading online provider of local, comprehensive real estate property listings and rich consumer focused content.

Homescape and HomeGain customer appreciation party at the Red Coconut Club in Orlando, FL, during the NAR Conference and Expo.

This past weekend, Homescape got the opportunity to showcase some of our newest products at the National Association of Realtor's Conference and Expo in Orlando, FL. The convention was held from Nov. 7-10 at the Orange County Convention Center.

While conference attendance was down at this year, compared to that of the previous year, the event was quite the shindig, featuring more than 500 exhibitors and thousands of real estate product and service innovations. There were also plenty of informative workshops and seminars that presented attendees with new ideas and productivity tools designed to save time and teach Realtors how to work more efficiently.

This lucky Realtor stopped by the Homescape booth and won a prize during the NAR Conference and Expo in Orlando, FL.

At the Homescape expo booth, our team collected over 2,600 leads (a 30 percent increase from last year) and sold 40 showcase packages (compared to only 10 last year).

The site's new redesign, the launch of our Green Initiative and our new mobile products made Homescape a big hit at NAR this year. Giving away Homescape teddy bears and cash prizes didn't hurt either!

This success belongs to the entire Homescape team working the conference booth and to the rest of the staff back in Chicago, who put much effort into the projects leading up to NAR.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Citigroup Halts Foreclosures on Eligible Loan Borrowers

2008-11-12T08:43:52Z

The foreclosure crisis doesn't appear to be going away anytime soon. More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

While many lenders and banks have been under heavy scrutiny for being too slow to rewrite troubled loans, a recent move by Citigroup may give homeowners on the edge some much-needed breathing room. Citigroup announced late Monday that it won't initiate a foreclosure, or complete a foreclosure sale, on any eligible borrower who seeks to stay in a home if it is the borrower's principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments.

In addition to that, according to the Associated Press, "Over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are deemed as potentially needing assistance to keep current with their payments. This represents about one-third of all the mortgages that Citigroup owns, the bank said."

Citigroup's plan of action
Citi plans to devote a team of 600 salespeople to assist in workouts with targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan.

The bank will initially target homeowners in geographic areas with higher-than-average unemployment and foreclosure rates, primarily in Arizona, California, Florida, Michigan, Ohio and Indiana. The program is expected to affect about $20 billion in mortgages.

Just last month, former U.S. Federal Reserve Chairman Alan Greenspan told Congress that stabilization of U.S. housing markets was a necessary precondition for the economy to heal.

While loans defaults across the country are growing faster than most banks can keep up with, other lenders, including JPMorgan and Bank of America, have recently become more aggressive about modifications to mortgage agreements. Officials from the Treasury Department and the Federal Deposit Insurance Corp. (FDIC) are also working on a new proposal that could help some 3 million homeowners who are behind on their mortgage payments and help keep them in their home. Sheila Bair, the chairwoman of the FDIC, has been the leading proponent of the plan and first discussed the idea publicly in late October.

With the economy possibly slipping into a deep recession, more layoffs are expected. This could open the floodgates to more loan defaults that may aggravate the already-bloated foreclosure market. By taking a proactive approach, Citigroup isn't waiting until it's too late to deal with delinquent borrowers. I think this is a very smart decision on their part, especially if they want to survive this economic tsunami.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

The Double-Edged Sword of Foreclosures

2008-11-11T08:43:45Z

The sales of foreclosed properties are having a noticeable impact on home prices and increased sales in major real estate markets across the United States. In August, 23 of the 25 metropolitan statistical areas (MSAs) tracked by Radar Logic's Residential Property Index experienced year-over-year home price declines, while 12 of the metro areas saw sale transactions increase. Both the price declines and the transaction count increases are due, in part, to growth in heavily discounted foreclosure-related sales, according to the Radar Logic's market report.

Motivated transactions, which Radar Logic defines as sales at foreclosure auctions and sales of foreclosed property by financial institutions, increased in all 25 metro areas since 2007 and in 22 MSAs since July. In some markets, the increase in transaction counts also reflected a seasonal uptick in market activity.

Radar Logic's key findings:

· In California, Arizona and Nevada, deep price discounts associated with foreclosures appear to have attracted buyers. Seven of nine markets that saw sales increase from a year ago were located in those states.

· The nine MSAs that saw sales pick up from a year ago were Sacramento (up 74.9 percent year-over-year), San Diego (52.9 percent), Los Angeles (47.4 percent), San Francisco (32.9 percent), Washington, DC (30 percent), Las Vegas (29.5 percent), Phoenix (22.9 percent), San Jose (16.3 percent) and Minneapolis (3.3 percent).

· Despite seeing a big increase in sales from a year ago, Los Angeles and Las Vegas saw transactions fall slightly from July to August.

· St. Louis saw the biggest decrease in transactions from July to August (down 15.7 percent) and year-over-year (down 43 percent), but remained the fourth-best performing market in year-over-year price appreciation (-4.2 percent).

· Five markets where sales hadn't bounced back to 2007 levels in August nevertheless saw sales pick up from the month before. Those markets were Boston (up 24.1 percent from July to August), Philadelphia (19 percent), Chicago (9.7 percent), Detroit (up 6.9 percent) and New York (0.2 percent).

Patience is a virtue
"While increases in motivated sales have put downward pressure on prices, it is important to bear in mind that prices have fallen substantially in transactions that are not related to foreclosures, said Radar Logic CEO Michael Feder in recent press release. Twenty MSAs have seen prices for transactions we do not classify as, ‘motivated' give back over 50 percent of the appreciation they experienced during the height of the housing boom. This indicates that home prices have made substantial progress toward equilibrium, though they may fall further before they reach it."

Feder also said: "The current initiative to reduce new foreclosures being led by the Federal Deposit Insurance Corporation (FDIC) could, if enacted, play an integral role in near term prices."

While it can be awfully frustrating right now if you're trying to sell your home and you're living in down markets like California, Florida or Las Vegas, but there's nothing much the average homeowner or Realtor can do to make this market speed up its recovery. It's a matter of waiting out a storm that was way overdue. Home sellers need to keep up with local market conditions and be realistic when pricing their property. The days of making 30 percent or more on your home is long gone. This doesn't mean it's impossible to sell your property under these strained conditions, it just means it's going to take a little more practical planning and, most of all, patience.

Interested in buying a foreclosed property? Homescape's Foreclosure Guide is packed with detailed advice that will guide you through the entire process. And learn more about your new community on our local Snapshot pages.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Reality Show Home Up for Sale

2008-11-10T08:48:01Z

About three months ago, I blogged about an "Extreme Makeover" home in Georgia that succumbed foreclosure. The owners, Milton and Patricia Harper, used the house at 5489 Ahyoka Drive in Clayton County, GA, as collateral for a $450,000 loan, the Associated Press reported.

Records at the law firm handling foreclosures for the lender, JPMorgan Chase Bank, confirmed at the time that the home was in foreclosure. The house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC's "Extreme Makeover: Home Edition" demolished their old property and its faulty septic system.

This former "Extreme Makeover" home in Port Orchard, WA, is listed for $550,000. Photo courtesy of Windermere.com

Call it bad luck or the "extreme jinx," but another one of the popular reality television show's home is on the market for sale. After only three years of calling the sprawling Washington property home, the Kirkwood family has placed their McMansion - located at 1366 SE Spruce Road in Port Orchard, WA - up for sale, according to the Kitsap Sun.com.

Washington home for sale
The price tag for the 5-bed, 4.5-bath home was once $650,000, according to the Windemere Real Estate Web site, but the price has been reduced to $550,000, Dawne Kirkwood told the Kitsap Sun. The home, which was built in the fall of 2005, boasts three large cleaners and filters that keep the home's air cleaner than that of a hospital.

But unlike the "Extreme Makeover" home in Georgia, the Kirkwood family is not being forced out by the bank. Despite her efforts to stay in the home, Dawne Kirkwood and her ex-husband, Michael, are selling due to their divorce. She has little choice, she told the Kitsap Sun, citing Washington's community property law. She and Michael divorced in August, and the law says property between the divorced parties must be halved.

Dawne also told the newspaper that because of "back property taxes, money owed to lawyers, and life's expenses, selling the home has become their only option." Dawne currently shares the home with her five children. Her ex-husband has since moved to Tennessee.

I guess you don't get more realistic than divorces and hefty property taxes in this day and age.

View more photos of the "Extreme Makeover" Washington Home for sale.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Homescape Goes Mobile

2008-11-07T10:56:51Z

I'm going home,
And when I want to go home, I'm going mobile.
Well I'm gonna find a home on wheels, see how it feels,
Goin' mobile.
Keep me moving...

- The Who, "Going Mobile"

Searching for a home on the go is simple with Homescape's new property listings for smartphones.

There's nothing more liberating than going mobile, footloose and fancy-free, with the (virtual) world at your fingertips. For today's home buyers, that means the convenience of punching up real estate listings on their wireless gizmos. That's pretty cool, seeing that you can do that while sitting on the bus or strolling through a neighborhood looking for open houses.

Here at Homescape, we've been busy revving up our search engines for home hunters who enjoy doing more on their mobile devices than just playing Pac-Man. Homescape now offers access to all of our 3 million-plus property listings directly from your iPhone, BlackBerry and similar Web-browsing smartphones.

We've formatted the listings to be easily readable on your phone's display, so don't worry about having to squint. You still get the same quality Homescape-listing features - in-depth property details, price sorting, multiple photos and open house notices - that you normally get on your computer's browser.

Ready to "find a home on wheels"? Punch up www.homescape.com/mobile on your phone's Web browser to start viewing Homescape real estate listings in your area.

Get buyer leads now
We didn't overlook the fact that no one enjoys being on the go more than Realtors. And we realize that when it comes to making a sale, time is of the essence. That's why Homescape's new mobile goodies also include a service for agents who want to field leads immediately from online buyers.

Our new Text Leads service sends a phone text message to an agent the minute a buyer sends them an e-mail lead from a property listing on www.homescape.com. Sure beats having to run back to the office to check for leads on a computer. Our service, which works on all mobile phones with text messaging, is ideal for independent agents or small brokerages that do not have e-mail-enabled smartphones or their own lead-management service or an office secretary. Even if you do have mobile e-mail, you can use our text service as an extra audio alert, notifying you to check your new lead right away.

For information on how to take advantage of Homescape's Text Leads, drop us a line at sales@homescape.com.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Homescape’s Green Initiative

2008-11-07T09:21:10Z

Going green at home used to just mean separating the plastic and paper from the rest of the garbage. But in most households today, consumers believe that energy conservation is essential and the cost of green improvements is a significant factor in their home-buying decisions. For consumers looking for a home that promotes green living, Homescape now identifies homes for sale that include eco-friendly and energy-efficient features. This new feature on our site is part of Homescape's green initiative, which also includes a comprehensive, consumer-focused Green Buying Guide.

Homescape flags listings as having green features, with a green home icon, making it easier for consumers to identify.

How our green listings work
We scrape our database of over 3 million listings for features and keywords and flag the ones that meet at least one of the specially selected green keywords or criteria. For example, a listing that contains descriptions such as bamboo floors, solar power and tankless water heater, will be automatically flagged with our green house icon.

In December, Homescape also plans to debut a special search function on our site that will allow consumers to find green home listings specific to their area.

View homes that promote green living

Denver home

Chicago home

Seattle home

The green features and "click here" link will launch an overlay with the interactive feature that explains items in a home that contribute to green living.

Green Buying Guide
The first phase of Homescape's green initiative, which came in the form of the Green Buying Guide, debuted in early October. The 10-article package, which is grouped with the Home Buying Guide and Foreclosure Guide, offers comprehensive information and advice on building and buying a green home and making your existing home more energy-efficient. It also addresses aspects of green real estate important to consumers, including:

· Tax incentives for green homes

· Going green on a budget

· Working with an eco-friendly Realtor

· Common myths of green homes

· Our guide includes an extensive Web-site directory of organizations, agencies and companies, where consumers can get more in-depth information about green building and eco-friendly living.

As more and more home buyers and homeowners become increasingly concerned about their personal energy use and how it affects the environment's health, we at Homescape want to provide consumers with the resources they need to better meet their green-living needs.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

The Myths Behind CFL Bulbs

2008-11-06T08:47:03Z

The other day my coworker and I got into a discussion about compact fluorescent light bulbs (CFLs). I'm a big fan of these energy-efficient bulbs, but she isn't. My coworker said she had all her CFL bulbs replaced after her electrician told her they were hazardous and more susceptible to short circuiting and causing a house fire. The electrician's advice seemed a bit farfetched to me and sounded more like a green myth.

CFLs aren't fire bombs
Over the past few years, [CFLs have been all the rage since eco-friendly living became mainstream. But these ice cream swirl-shaped bulbs have many people scratching their heads. In the United States, lighting accounts for 5 to 10 percent of the total energy use in an average home and costs $50 to $150 a year in energy bills, according to the Rocky Mountain Institute. Compared to general service incandescent lamps that emit the same amount of visible light, CFLs use less power and have a longer rated life, but they generally have a higher retail price.

CFLs are a type of fluorescent lighting, designed to replace an incandescent lamp and can fit in the existing light fixtures formerly used for incandescent bulbs. In the U.S., a CFL can save more than $30 in electricity costs over the lamp's lifetime, compared to an incandescent lamp and save 2,000 times its own weight in greenhouse gases. But be weary of cheaper CFLs, because the quality of lighting may lack the same kind of illumination as an incandescent and can burn out a lot faster.

According to National Geographic's Green Guide, CFLs are perfectly fire-safe to use in homes:

Although a melted plastic base near the coil of the bulb might lead you to believe the CFL is a fire hazard, it is just the opposite. In fact, the melted plastic and burn marks are a sign that the bulb was working just as it should.

If you look at the plastic base, or ballast, of the light bulb, you should see a symbol indicating that the ballast is UL certified, which means that the plastic on the exterior can safely function during bulb operation and at the end of the bulb's life. The fact that the plastic on your bulb's ballast melted and turned black is totally normal, says John Drengenberg, consumer affairs manager at Underwriters Laboratory (UL), the company that evaluates plastics for, among other things, flammability characteristics. A CFL generates light from an electric current that runs through glass tubing filled with gases.

The electrified gases emit ultraviolet radiation, which then comes in contact with a phosphorous lining on the glass, thus creating light. Bulbs burn out when the ballast overheats and an electronic component, the Voltage Dependent Resister (VDR), opens up like a fuse in your home's fuse box, shutting off the circuit and generating heat and possibly a small amount of smoke. This might sound dangerous, but the VDR is a cut-off switch that prevents any hazards. The melted plastic you're seeing where the glass coil connects to the ballast is simply a sign that the heat is escaping as intended in the design of the bulb.

Handling CFLs
According to fellow blogger and home inspector Frank Schulte-Ladbeck, the chemical inside fluorescent bulbs does contain a small amount of mercury, so if the bulbs do break and you handle them, you need to wash your hands right away.

"I have read no studies which indicate that CFLs are more likely to short circuit or pose any other hazard," says Schulte-Ladbeck.

Carefully cleaning up a broken CFL will help avoid spreading any powder, glass or mercury into the home. It's recommended that you should open the windows in the room where the bulb broke and allow it to air out for about 15 minutes. Never use a vacuum to clean up the broken bulb, and always wear rubber gloves if you have to handle the broken glass. Put the broken materials in a plastic bag, then double bag it and dispose of it. If there's no disposal or recycling places near you, you can throw it away in an outdoor trash bin.

As more energy-efficient and eco-friendly products become integrated into our homes, it's important to ask questions and do your own research on how to best handle these new gadgets.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Election Night in Chicago – Words Cannot Describe

2008-11-05T15:04:39Z

I usually blog about what's happening in the real estate market, but today's post will be a little different. Let me just say that last night, Chicago felt like the center of the universe.

I've lived in the Windy City for 10 years now, and never in my life have I experienced a night like the one of Nov. 4, 2008. Not even the White Sox winning the World Series or all the Chicago Bulls NBA championships can compare to the magnitude of emotions that ebbed and flowed last night across the lawns of Grant Park and down the sidewalks of nearby Michigan Avenue. It didn't matter whether the local votes were blue or red - no one who was here in this city last night could deny the intensity that permeated the atmosphere.

Homescape's offices are within walking distance from Grant Park, where newly elected president, Barack Obama, held his election-night rally. Many Homescape colleagues and I made our way over there to watch the festivities from this historic night. It was a night that I will never forget, a night where America ushered in its first African American president.

Election Night 2008 in pictures

This photo essay from the evening says it all. It includes shots taken by several of my friends in New York City, who captured the hoopla in their city.

"Buy a piece of history!" one street vendor yelled as people headed down to Grant Park. Vendors were hawking T-shirts for $20 and buttons for $3.

To the west of the park, a picturesque skyline painted a perfect backdrop with the spires of the Sears Tower in red, white and blue. On the north end, another building's windows glowed "USA".

By 9:30 p.m. CT on Tuesday night, thousands of people continued to crowd the entrance way at Congress Parkway to get into the ticketed and non-ticketed areas of Grant Park.

Long before election results began rolling in, people waited anxiously, text-messaging their friends inside the gated area of the park.

Non-ticket holders, who didn't have access to the main celebration area, still got to follow election results on several Jumbotron TV screens positioned throughout the park.

Tired of standing, some people found a good view of the festivities on top of Porta Potties.

A guy carried an American flag as he and his buddies watched election results from atop a Porta Pottie.

This young boy, perched on his father's shoulder, waved a flag and cheered every time Obama racked up more electoral votes.

The people who attended the Obama rally ranged from all age groups and ethnicities.

Inside Grant Park, people watched - some still shocked, others in awe - as Barack Obama gave his acceptance speech.

People took to the streets, dancing, waving Obama signs and high-fiving strangers as they made their way out of Grant Park. One man was offering free hugs to people leaving the rally.

One man, who was singing in celebration, held up a sign that read "Yes We Did."

The GE building in New York City kept count of the electoral votes on the front of their building, with red, white and blue lights illuminating the facade of the art deco skyscraper. Photo courtesy of Adam Valentine.

The Rockefeller Center was also aglow with red, white and blue. Photo courtesy of Adam Valentine.

I want to give special thanks to Homescapers Angela Ripinski and Nitha Nagubadi, who contributed some of the photos to this essay.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

The American Dream

2008-11-04T08:41:42Z

Today's election day, and I'm feeling extra patriotic - even without sporting my American flag lapel pin. I got out of bed bright and early this morning to cast my votes for the next president of the United States and other candidates running for office in my area. But I'll keep those checkmarks between me and the ballot box. With early voting last week attracting a record number of voters across the country, election officials are expecting even more people to head to the polls today to exercise their civic duty.

The 2008 presidential election is being considered one of the most significant elections in U.S. history. The meltdown of the financial and housing markets have been key issues at the forefront of this year's national and local races, and will continue to impact all Americans long after the voting booths have closed. The next president will play a vital role in defining the future of our country and reshaping the current financial and foreign policies. As the dreams and aspirations of Americans continue to evolve from generation to generation, many of the ideas and values from which this country was built upon will remain at the core.

What about homeownership?
J. Walter Thompson, a leading New York advertising firm, recently released their "American Dream in the Balance" survey, which took a look at what the American Dream currently means and how the concept has changed or remained the same over the decades.

The survey, based on the responses of 2,112 adults, addressed public perceptions about homeownership during the economic downturn. Conducted from September 11th to 19th, the survey found homeownership as one of the most important elements of achieving the American Dream.

Although financial security, finding happiness, personal independence, fulfilling my potential and freedom of speech ranked higher, those surveyed said homeownership was a bigger component of achieving the American Dream than "a better life for my children," freedom from fear of oppression, and a comfortable lifestyle.

While homeownership was important to all age groups, it was slightly more important to baby boomers than any other group, according to the survey. Only 65 percent of Americans with household incomes below $40,000 a year believe in an American Dream, compared with 75 percent of those earning $40,000-$70,000 and 82 percent of those with incomes above $70,000.

Additional survey findings

• By a wide margin of 84 percent to 71 percent, Republicans believe more in the American Dream than Democrats do. Those not affiliated with either party are least likely (66 percent) to believe in the dream.

• More than six in 10 people see high health-care costs as a barrier to the American Dream.

• Every age group in the survey still believes the U.S. is the land of opportunity.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Homescape to Show New Products at NAR

2008-11-03T09:08:22Z

This has been a very exciting year for us here at Homescape. From the new, übercool redesign of our home page to the launch of our home buying guides and green property listings, we've worked hard in 2008 to give you a top-notch real estate Web site.

We'll be showing our goods at this year's National Association of Realtors Conference and Expo, November 7-10 at the Orange County Convention Center in Orlando, FL. This marks Homescape's third appearance at NAR's largest trade show. Despite the downturn in the housing market, Homescape continues to create new and innovative search tools for home buyers and sellers.

"In today's challenging market, Homescape is more committed than ever to providing our customers and consumers with a comprehensive set of online marketing tools that effectively drive traffic and leads back to the real estate professional and the listings," said Tim Fagan, President of Classified Ventures Real Estate. "We are excited to showcase our trusted array of online marketing solutions and new products for real estate agents and brokers this year at the NAR Conference and Expo.

With over 3 million home listings, Homescape is a leading online provider of local, comprehensive real estate property listings and rich consumer focused content. At the NAR conference, we will debut our newly launched Green Initiative, which consists of eco-friendly home features in property listings and the Green Buying Guide, a series of advice articles on what to look for in a green home. Other new Homescape offerings you will see at the show are the Foreclosure Guide for those interested in a foreclosure properties, and a mobile text lead service for agents and brokers. Since the last time Homescape graced NAR's expo, we have added the consumer-focused blog, Opening Doors, redesigned our national home page and added enhanced mapping capabilities with Google Street View.

If you're down at the NAR conference this week, swing by Homescape's booth (No. 3331). We'll be giving away goodies such as cash prizes and stuffed animals.

The event will be quite the shindig, feauturing more than 500 exhibitors and thousands of product and service innovations. Workshops and seminars will present attendees with new ideas and productivity tools designed to save time and teach Realtors how to work more efficiently and make more money in today's rough market.

Hope to see you there!

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

New Plan to Help Troubled Home Loans

2008-10-31T09:14:36Z

Put away the pitchforks and torches, there may be some help on the way for struggling homeowners. The $700 billion bailout of Wall Street and private banks has been under heavy scrutiny from taxpayers, who say the government has done little or nothing for Main Street Americans on the verge of loosing their homes. Officials from the Treasury Department and the Federal Deposit Insurance Corp. (FDIC) are working on a new proposal that could help some 3 million homeowners behind on their mortgage payments and help keep them in their home, according to a New York Times report published Thursday. Sheila Bair, the chairwoman of the FDIC, has been the leading proponent of the plan and first discussed the idea publicly a week ago.

Details of the plan
Funding for the plan, which is estimated to cost between $40 billion to $50 billion, would be apart of the $700 billion financial bailout package that Congress approved earlier this month. The Times reports, "The money would go toward covering future losses on loans that are modified according to standards established by the government. The program is intended to entice more mortgage servicing companies that handle billings and collections to reduce payments for homeowners by lowering interest rates, writing down loan balances or changing other loan terms."

Despite the government's earlier efforts with the voluntary HOPE NOW program, - which critics argue has done little to temper the growing mortgage default problem - many companies have been reluctant to aggressively reduce payments because they are afraid that borrowers might default again or that investors in mortgage securities might file suit.

But the government may have no option but to step in now, especially if escalating foreclosures and a falloff in property and other tax revenues endanger local governments and force some into bankruptcy. About 12 million U.S. homeowners owe more on their mortgage than their homes are worth, compared with 6.6 million at the end of last year and slightly more than 3 million at the close of 2006, according to a report from Economy.com. With the economy possibly slipping into a deep recession, more layoffs are expected. This could open the floodgates to more loan defaults that may aggravate the already-bloated foreclosure market.

Shell out the cash
Unlike the HOPE NOW initiative, the government under this new proposal plans to shoulder half of any future losses, in order to encourage more lenders and banks to take part in writing down loan or changing loan terms. The big reason why most lenders and banks haven't reworked many of the troubled loans on their books, is that they would loose money. The CEOs of these companies have shareholder money to safeguard.

I'm interested to see how this plan will come into fruition. A homeowner bailout is a lot more complex then simply tossing out the bad loan and rewriting a new one. I recently read a great article in U.S. News & World Report that deconstructs the troubled mortgages' problem:

Of the 5 million problem mortgages, the majority have been "securitized," which in many cases means the loan has been carved up into various pieces representing repayment of the principal, say, or the interest payments, and then bundled up with pieces of other mortgages and sold as securities to investors worldwide. Some of those have been resold to other investors or pledged as collateral in other deals. It could take as much work to identify all the investors in a single $300,000 mortgage as it does to execute a $3 billion federal investment in a bank with thousands of customers. Now, multiply that effort by 5 million loans.

When the loan is held by the bank that issued it, the problem is not as convoluted - like the good old days before Wall Street entered the picture. The banks that issued their own mortgages and held onto them don't have a downstream of investors to consult, and so the mortgages are left intact. But this scenario is not as common as it once was. It's estimated that 68 percent of all subprime mortgages are securitized and about half of all securitized subprime loans are held by private institutions, rather than government-controlled entities like Fannie Mae and Freddie Mac.

With the government's new plan, they can help borrowers by buying up all those bad loans - at a hefty price - and refinancing them on more affordable terms. But as for the guys who helped push those risky loan products - and now won't rewrite them, because they don't want to loose money and upset their shareholders - they get to sit back and watch big daddy government come in and clean up the mess. Again.

Now where did I put that pitchfork?

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Back to the Future of the Housing Market

2008-10-30T08:49:58Z

In the film, "Back to the Future," Marty McFly meets Doc as planned in the parking lot of Twin Pines Mall. Doc presents a DeLorean DMC-12 which he has modified into a time machine. As Marty videotapes, Doc explains the car travels to a programmed date and time upon reaching 88 miles per hour using plutonium in a nuclear reaction to generate the 1.21 gigawatts of power it requires. Demonstrating how to program the machine, Doc enters in November 5, 1955 as the target date, explaining that it was the day he conceived the idea of the flux capacitor; the device which "makes time travel possible."

In recent months, we have watched the housing and financial markets completely collapse before our eyes. While hindsight is 20-20, I'm sure there are plenty of CEO's out there wishing they could jump inside Doc's DeLorean right about now and set the clock back to 2000. From former Lehman Brothers CEO Richard Fuld to Alan Greenspan, the former Federal Reserve chairman, many of the country's top financial gurus say they didn't see the glacier coming.

Foreseeing the collapse

But how could the smartest economists and business leaders in the country not see this massive meltdown coming? During my studious search to make sense of the housing and financial debacle, I stumbled upon a 2007 Washington Post article written about Edward M. Gramlich. Gramlich, was a former Federal Reserve System governor, who died in September 2007 at the age of 68. Although he was no Nostradamus, Gramlich warned nearly seven years before his death, that a fast-growing, new breed of lender was luring many people into risky mortgages they could not afford.

Former Federal Reserve governor Edward M. Gramlich.

Gramlich served on the Fed's Board of Governors from 1997 to 2005. In June 2007, he published "Subprime Mortgages: America's Latest Boom and Bust" on a topic that he had warned about for years. Much earlier, as chairman of the Neighborhood Reinvestment Corp., he had urged lawmakers to better protect consumers against predatory lending practices by toughening the regulation of mortgage lenders and banks. He called the mortgage process "confusing, costly and far less than optimal."

Gramlich continued that campaign as a Fed governor in December 2000. He was among those who wanted to tighten regulation of high-cost home loans long before the current panic set in. A The New York Times article published December 18, 2007,reported that Gramlich had privately urged Fed Examiners to investigate mortgage lenders affiliated with national banks, but he was rebuffed by Greenspan.

Greenspan's way or the highway
Greenspan and other Fed officials repeatedly dismissed warnings about a speculative bubble in housing prices. In December 2004, the Federal Reserve Bank of New York issued a report bluntly declaring that "no bubble exists." At the time, Greenspan predicted several times - incorrectly, it turned out - that housing declines would be local but almost certainly not nationwide.

The Fed was hardly alone in not pressing to clean up the mortgage industry. When states like Georgia and North Carolina started to pass tougher laws against abusive lending practices, the Office of the Comptroller of the Currency successfully prohibited them from investigating local subsidiaries of nationally chartered banks. The Feds were counting on the housing boom to prop up the economy after the stock market collapsed in 2000 from the dot.com bust. You can say that the government had put all their eggs in one basket, and those eggs spoiled before they knew it.

Financial innovation outweighed the concerns of the millions of new homeowners that had boarded the subprime Titanic ship. I can't tell you the number of stories I hear from mortgage brokers and managers who tell me they had felt uncomfortable selling the new wave of subprime loan products that had flooded the market in 2000. Even they knew then that something wasn't right, but they were pressured to sell, "because everyone else in the industry was selling the same products."

"Sometimes, one's advice must be weighted toward economic practicality, sometimes toward humanity," Gramlich said during his Fed nomination hearing in September 1997. "A good economist should know how to balance both objectives."

Gramlich never needed Doc's DeLorean.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Home Prices Continue Dropping in August

2008-10-29T08:35:14Z

The housing market has been slightly uplifted in recent weeks with positive news from the U.S. Department of Commerce and the National Association of Realtors about increases in new and existing home sales. But don't start celebrating yet. Prices of existing homes in August continue to show broad declines across the country, according to the latest Standard & Poor's/Case-Shiller Home Price Indices released on Tuesday.

The 20-city housing index dropped a record 16.6 percent from August last year, the largest drop since its inception in 2000. Case-Shiller's 10-city index also plunged 17.7 percent, the biggest drop in its 21-year history. Both indices have recorded year-over-year declines for 20 consecutive months, according to the report. Prices in the 20-city index have plummeted more than 20 percent since peaking in July 2006. For the fifth straight month, no city in the Case-Shiller 20-city index saw annual price gains.

Regional trends
The report, however, wasn't all gloom and doom. The pace of monthly declines did moderate last month from July, and Boston and Cleveland showed monthly gains from July to August. Boston, the first city to post price declines in the 20-city index starting in October 2005, has recorded five straight monthly gains in home values.

In contrast, Dallas and Denver both showed negative returns in August after four consecutive months of increases.

As seen throughout 2008, the Sun Belt markets are being hit the hardest with home depreciations. Phoenix and Las Vegas are both reporting annual declines in excess of 30 percent, and Miami, San Francisco, Los Angeles and San Diego are all in excess of 25 percent. Miami and Tampa, the two Florida markets, are down 28.1 percent and 18.1 percent, respectively. Nine of the 20 regions have record annual declines.

Price declines in the 20-city index

1. Phoenix, -30.7%
2. Las Vegas, -30.6%
3. Miami, -28.1%
4. San Francisco, -27.3%
5. Los Angeles, -26.7%
6. San Diego, -25.8%
7. Tampa, -18.1%
8. Detroit, -17.2%
9. Washington, -15.4%
10. Minneapolis, -13.8%
11. Chicago, -9.8%
12. Seattle, -8.8%
13. Atlanta, -8.5%
14. Portland, -7.6%
15. New York, -6.9%
16. Cleveland, -6.6%
17. Denver, -5.1%
18. Boston, -4.7%
19. Charlotte, -2.8%
20. Dallas, -2.7%

Source: Standard & Poor's and Fiserv (data through August 2008)

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

New Home Sales Up in September

2008-10-28T08:59:26Z

As median home prices dropped to the lowest level in four years, many economists appeared pleased that the housing market is beginning to chip away at the inventory glut. The U.S. Commerce Department said Monday that sales of new single-family homes rose by 2.7 percent in September to a seasonally adjusted annual rate of 464,000 units.

The new data comes on the heels of a National Association of Realtors (NAR) report released Friday that said existing-home sales also increased in September, as buyers responded to greater affordability. Existing sales - which consist of single-family homes, townhouses, condominiums and co-ops - rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September. That's up from a level of 4.91 million units in August and 1.4 percent higher than the 5.11 million units sold in September 2007, according to the report.

Affordability drawing buyers
While the credit markets have been gridlocked, and obtaining a home loan is not as easy as it was during the housing boom, affordability has never been greater for new buyers. The median price of a new home declined by 9.1 percent from a year ago to $218,400, its lowest level since September 2004, according to the Commerce Department.

The national median price for all types of existing homes was $191,600 in September, down 9.0 percent from a year ago, when the median was $210,500, NAR reported. Foreclosures or short sales currently make up 35 to 40 percent of transactions. NAR says these distressed sales are pulling the median price down, because many are being sold at discounted prices.

As a prospective home buyer, don't believe everything you read. Despite the barrage of negative housing news, obtaining a home loan is not as impossible as some news reports allege, but only if you have a solid credit rating and make decent money.

Over the weekend, I had dinner with some friends who recently made a deal on a preconstruction condo in downtown Chicago. My friends have been looking for over a year, but decided not to take the plunge until recently. Their waiting has paid off. Both of them have excellent credit scores and good jobs, so they were immediately approved for a conventional, 30-year fixed-rate mortgage. With home values down and fewer buyers in the market, they went in with the upper hand and were able to negotiate the asking price down by some $15,000. Not only that, they got all the condo's swanky upgrades included in the price. So when real estate agents tell you this is a buyer's market, they're not lying.

Sellers, be realistic
Many homeowners who want to sell their homes in today's down market are holding out. Others, who have no choice but to put their property on the block (especially if they're relocating for work), need to be realistic about their asking price.

Another friend of mind, who recently decided to move from the city into the suburbs, had to reduce the asking price for his 4-bed, 3-bath duplex from $850,000 to $750,000 (the result of several failed reductions in between). After the price reduction, he received three bids on the property. The duplex had been on the market for nearly six months without a single offer. Taking a $100,000 loss is not something most sellers want to do or will likely do. But in my friend's situation, he didn't want to get stuck paying two mortgages. And with today's shaky financial market, he was willing to take a major loss to get the property sold. My friend is a successful entrepreneur and is no novice at selling homes. He moonlights as a real estate investor and points out that people are naive if they think they can still rake in a 20-to-30 percent profit in today's market.

If the housing meltdown has taught us anything, it's the lesson that owning a home is a long-term investment. Buying a property today and trying to sell it within the next two years isn't going to net you the same profits it once did during the boom. I can't stress enough the importance of doing your homework before you buy. Get to know your area's community, schools and crime rate. Being patient and well-informed could mean the difference between a profit and a loss.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Home Sales Up in September

2008-10-27T09:19:14Z

The National Association of Realtors (NAR) reported on Friday that existing home sales increased last month as buyers responded to improved housing affordability conditions. Existing sales - which consist of single-family homes, townhomes, condominiums and co-ops - rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007, according to the report.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. "The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island," he said in a press release. "The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike."

NAR officials have credited decreases in home prices and lowered interest rates bringing buyers back to the market. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.09 percent on September 25 from 6.48 percent in August; the rate was 6.38 percent in September 2007. As of Oct. 23, 2008 it was at 6.04 percent.

Total housing inventory at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July. Many economists argue that until the bloated housing inventory significantly decreases, home values will continue to decline in many markets across the country.

The national median price for all types of existing homes was $191,600 in September, down 9.0 percent from a year ago, when the median was $210,500. Foreclosures or short sales currently make up 35 to 40 percent of transactions. And these types of distressed sales are pulling the median price down, because many are being sold at discounted prices, NAR reports.

Home-builder confidence
In a separate report this month, confidence among home builders hit a record low in October, a likely reflection of builders' assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence, an industry group said.

The National Association of Home Builders-Wells Fargo Housing Market Index (HMI) declined three points to 14 after edging up slightly in September. When the index falls below 50, that indicates more builders view sales conditions as poor (rather than good).

NAHB has been conducting the monthly survey for more than 20 years, and the group said results of the latest poll are evidence that Congress needs to draft another economic stimulus package that includes "substantial" incentives to spur home buying. NAR has also been lobbying Congress for my housing help.

Whether the housing stats are up or down, one thing is for sure: This rollercoaster ride is not yet over.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

New State Legislations Slow Down Foreclosures

2008-10-24T09:22:30Z

RealtyTrac on Thursday released its U.S. Foreclosure Market Report for September 2008 with some positive developments. While foreclosure filings reported on 265,968 properties in September - which included default notices, auction sale notices and bank repossessions - saw a 12 percent decrease from the previous month, there was still a 21 percent increase from September 2007. One in every 475 U.S. housing units received a foreclosure filing in September.

Slowing down foreclosures
So what's behind the 12 percent drop?

"Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.

Most significantly, SB 1137 in California took effect in early September and requires lenders to make contact with borrowers at least 30 days before filing a notice of default (NOD). In September, California saw NODs drop 51 percent from the previous month, and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation's foreclosure activity each month.

Another example is North Carolina, where legislation was signed into law in August that requires lenders to provide homeowners and the state's commissioner of banks a 45-day notice prior to filing a NOD. NODs drop 66 percent in North Carolina in September.

But new legislation isn't having a positive effect on every state. Initial foreclosure filings in Massachusetts jumped 465 percent from August to September after being much lower than normal in June, July and August. That temporary lull happened after a new law took effect in May requiring lenders to give homeowners a 90-day right to a cure notice (grace period) before initiating foreclosure. But in September, about 90 days after the law took effect, initial foreclosure notices jumped back up close to the level earlier in the year.

Top foreclosure states
Nevada continued to document the nation's highest state foreclosure rate in September due to an 11 percent increase in foreclosure activity from the previous month. Foreclosure filings were reported on 13,022 Nevada properties during the month, an increase of 137 percent from September 2007 and one in every 82 housing units - more than 5 times the national average.

A 9 percent month-over-month increase in foreclosure activity helped Florida's foreclosure rate leapfrog past foreclosure rates in Arizona and California to take the No. 2 spot, with one in every 178 housing units receiving a foreclosure filing in September. Foreclosure filings were reported on 47,956 Florida properties during the month, an increase of 44 percent from September of 2007.

Foreclosure filings were reported on 69,548 California properties in September, a 32 percent decrease from the previous month but still up 36 percent from September 2007. With one in every 189 housing units receiving a foreclosure filing during September, the state's foreclosure rate slipped to third highest among the states.

Other states with foreclosure rates ranking among the top 10 in September were Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

California alone accounted for six of the top 10 metropolitan cities with foreclosures, with Stockton, CA, taking the top spot with 3.69 percent of its housing units receiving a foreclosure filing during the quarter. Other California cities in the top 10 for foreclosure rate were Riverside-San Bernardino at No. 3, Bakersfield at No. 4, Sacramento at No. 7, Fresno at No. 9 and Oakland at No. 10.

Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday that stabilization of U.S. housing markets - a necessary precondition for the economy to heal - is "many months in the future." Other economists say that in a best-case scenario, the housing market should bottom out by June 2009, while the worst-case outlook points to the summer of 2010.

Want detailed advice on avoiding foreclosure or buying a foreclosure home? Homescape's Foreclosure Guide will guide you through the entire process. And learn more about your new community on our local Snapshot pages.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

The Rise of Underwater Mortgages

2008-10-23T08:41:00Z

About 12 million U.S. homeowners owe more on their mortgage than their homes are worth, compared with 6.6 million at the end of last year and slightly more than 3 million at the close of 2006. That's the bad news from Mark Zandi, chief economist at Moody's Economy.com, quoted in a Reuters news report on Tuesday.

As the financial crisis hits Main Street America, nearly one in six U.S. homeowners are finding themselves in the same position, threatening the economy with a new wave of foreclosures and bankruptcies, Reuters reported.

Sinking mortgages
Zandi argues that "underwater mortgages" - when homeowners owe more on their mortgages than their homes are worth - is what's suffocating the housing market and will continue to fuel the problem. Today, more and more homeowners are finding themselves in this situation and are either being forced into foreclosure or they're walking away from their properties altogether. With the country's financial health so vulnerable, economists are worried it won't take much to put an underwater mortgage into default, thus leading to another hefty wave of foreclosures to hit the already-fragile housing market.

With current home prices likely to decline on average by another 10 percent, Zandi said there will be 14.6 million homeowners under water by September 2009. He and other economists worry that the underlying housing crisis could eventually prove much more costly to the U.S. taxpayer than the $700 billion the government has pledged to recapitalize banks and buy up distressed debt from financial institutions.

The $700 billion bailout plan has been focused on rescuing banks, and it has done little to help individuals who are struggling to pay their mortgages, apart from the HOPE NOW program, which has been under large scrutiny for not doing enough to temper the problem.

The government may have no option but to step in, especially if escalating foreclosures and a falloff in property and other tax revenues endanger municipalities and local governments and force some into bankruptcy.

Finding a solution
Both presidential candidates, Barack Obama and John McCain, have outlined plans to relieve distressed homeowners. But critics say they have been short on details, and there appears to be little consensus about how best to help homeowners who are under water. Foreclosed homes already account for 50 percent of all home sales in some markets, and the problem doesn't appear to be going away anytime soon. I think Active Rain blogger Bo Hussung said it best in a comment in one of my posts last week:

"If the lenders do not jump on the wagon, all the money in the world is not going to fix the underlying problem, and right now, [the Hope Now] program is all voluntary."

Maybe it's time for some of these mortgage lenders to play a bigger role and take some initiative, especially by rewriting bad loans. We can't expect the government to hold everyone's hand.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

U.S. Cities Expected to Rebound from Housing Crash

2008-10-22T09:29:19Z

The November issue of SmartMoney magazine profiles 25 metropolitan areas that are most likely expected to have a healthy rebound as the housing crisis bottoms out. So who are some of the lucky cities with the good karma coming their way?

This 3-bed, 3-bath Mid-Century Modern home in Seattle, WA, is listed for $524,950.

1. Seattle, WA:

· Prices here peaked 65 percent above January 2003 levels, compared with more than 95 percent in Los Angeles, CA.

· Only 11.5 percent of local homeowners who bought in the last five years have negative equity. The national average is 29 percent.

View Seattle homes for sale

This 4-bed, 2-bath, Des Moines, IA, home lists for $485,000.

2. Des Moines, IA:

· The city's median home price is $156,600.

· The suburb of West Des Moines is a particularly strong market, with only six to seven months of inventory, compared to 10 or 11 months in other parts of the metro area.

View Moines Des Moines homes for sale

This 4-bed, 3-bath Raleigh, NC, home boasts a gourmet kitchen with granite countertops, a large island and all new appliances. The home also features a bonus room that can be converted into an office or exercise space. The home lists for $417,900.

3. Raleigh, NC:

· Prices here have been buoyed by job growth in the Research Triangle, home to dozens of tech firms. Total sales in the first quarter of this year were the fifth highest on record.

· The real growth has come in suburbs like Cary, Morrisville and Apex, all on the western side of Raleigh, where home prices have risen steadily. In the subdivision of Preston, prices are up 3.5 percent over last year.

View Raleigh homes for sale

This 4-bed, 4-bath Salt Lake City, UT, home lists for $549,000.

4. Salt Lake City, UT:

· A diverse economy with steady gains in health care, education and natural resources has offset a slumping market for home builders and kept job growth in the positive and kept home prices steady.

· The city's downtown continues to grow with more commercial and residential developments, making the area one of the hottest residential neighborhoods in Salt Lake City.

View Lake City Salt Lake City homes for sale

This 4-bed, 4-bath Birmingham, AL, home lists for $349,000.

5. Birmingham, AL:

· Median home prices in the area that encompasses Birmingham's Jefferson and three other counties have held up well. The suburb of Mountain Brook has fared particularly well, with median home prices at $535,000 for the first half of 2008. The region's median home price is $163,500.

· The city's low labor and land costs have attracted many businesses to the area.

View Birmingham homes for sale

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

NAR Wants Additional Housing Rescue from Washington

2008-10-21T09:27:28Z

From Wall Street to the nation's automotive giants, everyone wants a piece of Congress's $700 billion bailout pie. And last week, the National Association of Realtors (NAR) called for housing stimulus legislation that would tap the rescue pot. The stimulus legislation NAR is proposing would include eliminating the repayment of the $7,500 first-time home buyer tax credit and expanding it to all home buyers, and making higher mortgage loan limits permanent to benefit buyers in high-cost areas.

In addition, the trade group wants banks to extend credit to Main Street, expediting the process for short sales and banks' real estate-owned properties (REOs), and prohibiting banks from entering into real estate brokerage and management.

"Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible," said NAR President Richard Gaylord in a press release. "It is vital to the economy that Congress take specific actions to boost the confidence of potential home buyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."

NAR wants Congress to pass new housing stimulus legislation that includes the following priorities:

1. Remove the requirement in the current law that first-time home buyers repay the $7,500 tax credit, and expand the tax credit to apply not only to first-time buyers but also to all buyers of a primary residence.

2. Make permanent the 2008 stimulus loan-limit increases to FHA, Fannie Mae and Freddie Mac. The Economic Stabilization Act, enacted in February, made loan-limit increases temporary, and subsequent legislation reduced the loan limits and made them permanent. This has broad implication for home buyers in high cost areas.

3. Support the $700 billion plan to purchase mortgage-backed securities from banks to provide price stabilization for housing. NAR is urging the Treasury Department to use the newly enacted Troubled Assets Relief Program to push banks to:

· Extend credit down to Main Street, making credit more available to consumers and small businesses.

· Expedite the process for short sales.

· Expedite the resolution of banks' REOs.

4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Housing Starts Plummet in September

2008-10-20T09:28:43Z

Privately owned housing starts fell to a seasonally adjusted annual rate of 817,000 in September, according to the U.S. Commerce Department report on new residential construction. The rate was down 6.3 percent from August's revised reading of 872,000 and 31 percent lower than September 2007. Building permits also sank.

Housing starts have fallen by nearly two-thirds from their peak of 2.3 million in January 2006, and were at the lowest annual pace since January 1991.

New construction of single-family homes - which make up a good chunk of the housing market - were at a rate of 544,000, or 12 percent below August's number. Single-family housing starts have fallen 70 percent since their peak in January 2006, and have not been at such a low a rate since February 1982.

Applications for building permits, considered a reliable sign of future construction activity, fell to a seasonally adjusted annual rate of 786,000 last month. That's 8.3 percent below the revised 857,000 rate in August, and the lowest level for permits since November 1981.

NAR's take
The National Association of Realtors (NAR), meanwhile, counts 4.26 million existing homes up for sale at the end of August - equivalent to a supply of roughly 10.4 months at the current sales pace. The trade group, which typically projects a rosier outlook on housing stats, explains that "supply and demand in the housing market is considered balanced when the inventory settles at about six months."

While many builders have put the breaks on constructing new homes, I don't think this is a negative sign. Don't get me wrong, I think it's horrible that developers and home builders have started laying off huge sections of their work force due to the housing downturn. My best friend's brother, who works for a home builder here in Chicago, got the pink slip last week. He was told by his company that they were suspending production of new projects for the next three months, and by the end of October there would be no work until further notice. Mike is the sole financial provider for his family, and with the holidays right around the corner, he doesn't know what to do. It's not like there are many jobs open for guys like Mike who do residential construction.

The reality that many builders face today is one of a bloated housing market, which was fueled by their excessive development during the housing frenzy. And until the abnormally high levels of inventory subside, the number of new construction homes will remain stuck in the cellar.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Raleigh: America's Main Street Sweetheart

2008-10-17T09:02:03Z

Over the past month, there's been a whole lot of rhetoric from presidential candidates Barack Obama and John McCain dedicated to Main Street America. The candidates have been name dropping names such as Scranton, PA, and Wasilla, AK, towns that most people knew very little about until this year's election. While small-town America has been the heart and soul of this country, a new breed of metropolises has become the playground for Joe the Plumbers of this country. And city's like Raleigh, NC, represent the new face of American prosperity.

Raleigh has garnered the titles of the Best Place to Live and Work in the Nation, the Best Business Climate, and the Best Place in the U.S. for Educational Opportunities from Money, Fortune and Time magazines.

Economic stronghold
The city's industrial base includes electrical infrastructure systems, medical research, electronic and telecommunications equipment, clothing and apparel, food processing, paper products and pharmaceuticals. Raleigh is part of North Carolina's Research Triangle, one of the country's largest and most successful research parks and a major center in the country for high-tech and biotech research, as well as advanced textile development. Aside from being the state's capital city, Raleigh is a major retail shipping point for eastern North Carolina and a wholesale distributing point for the grocery industry.

"In recent years, Raleigh's downtown central business district has seen revitalization with the infusion of urban residential and commercial developments," says Jack Gallagher, a national consultant in new homes and marketing.

In a phone interview with me earlier this week, Gallagher tells me that new condo developments and commercial high-rise buildings in Raleigh are helping to shape the landscape of the city. But while the downtown area has been experiencing its own renaissance, over the last 10 to 12 years there's been massive growth outside the city's beltline in the northern and southern parts of the city.

Suburban growth
Located near the Interstate 540 expressway, North Raleigh is an expansive, diverse and fast-growing suburban area of the city that is home to established neighborhoods to the south. There are also many newly built subdivisions along its northern fringes. The area generally falls North of Millbrook Road. It's primarily suburban with large, spread-out shopping areas. Primary neighborhoods and subdivisions include Bedford, Bent Tree, Brentwood, Brookhaven, Crossgate, Falls River, North Ridge, Stonebridge, Stone Creek, Stonehenge, Wakefield and Woodspring. The North Raleigh area is only a 20-minute drive from the downtown business district and a 15-minute commute to the airport.

Gallagher's 4-bed, 3-bath North Raleigh home boasts a gourmet kitchen with granite countertops, a large island and all new appliances. The home also features a bonus room that can be converted into an office or exercise space. The home is listed for $417,900.

Gallagher, who bought a house in the Woodspring subdivision nine years ago with his wife, is now selling it, and the pair plan on retiring to their beach house in Topsail, NC.

"North Raleigh is a great place to live and raise a family," he says. "There's a nice mix of young and older families (empty nesters). And the average price for a home in the area is still very affordable, ranging between $380,000 to $500,000."

What does Gallagher like most about his neighborhood? The annual block parties over the holidays.

"On the fourth of July, all the kids in the neighborhood decorate their bikes and parade down the block," he says. "And on Christmas, everyone on the street lights up their luminaries and we walk through the neighborhood. It's really been a joy living here."

For more information on Gallagher's home for sale, you can e-mail him at jgall18@aol.com.

View Raleigh, NC, homes for sale

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Gen Y Home Buyers Aren’t Their Parents

2008-10-16T09:26:49Z

Move over mom and dad, junior's taking over the market. Whether they're driving off in hybrid vehicles or sipping on organic soymilk lattes, members of Generation Y are emerging as a consumer powerhouse that is changing the landscape of America. And while most Gen Yers (also called Millennials) consider themselves apartment renters today, they will most likely be inking the contracts on their first homes within the next four years. According to a recent Atlantic Journal Constitution article, "people in their 20s - Generation Y - are changing residential real estate in Atlanta."

The Gen Y group is made up of people born from 1979 to 1996. This generation is about 80 million strong in the United States and represents 26 percent of the U.S. population and are worth $1.6 trillion in earning power, according to the research firm Robert Charles Lesser & Co. The article states that "by 2015, Gen Y will make up more than a third of residents in this country, and their expectations are forcing developers to rethink how projects are designed, built and sold."

What Gen Yers want
Bottom line: Many in Gen Y have little interest in the lawn mowing, cul-de-sac lifestyle that's characteristic of so much of Atlanta. At least for now.

Instead, Gen Y wants high-tech convenience and communication, walkability, green building standards and diversity. They'll sacrifice space, and some will even pay more, to incorporate those qualities into their lives, real estate experts say. This emerging generation is also looking for homes based primarily on location. They're moving toward areas that are transportation-oriented, such as near light rail, and close to social entertainment. Gen Yers desire privacy above maintenance, and the majority of Gen Yers purchase townhomes or condos, rather than single-family homes. They also want amenities that enhance their way of life, such as smart technology in their electronics and appliances. An architectural trend for Gen Yers is a strong private and personal space. And unlike their parents and grandparents, this younger generation has no fear of color. Generally, they can live with the traditional beige walls for a while, but in time, they will paint the room to suit their style. This generation wants untraditional floors plans and flexability in their architecture and decoration.

So what happens when these Gen Yers grow up? Will they pack up their ultra-urban, eco-chic condos and head out to the white picket-fence burbs, just as their parents did?

The Lesser study states that "70 percent do not believe they have to move to the suburbs once they have kids." And "only half are confident they will need a single-family home once they have kids." But unless you have a crystal ball or work as a weatherman, it's hard to predict the future. What the market does know, is this a generation that is beginning to define emerging consumer trends.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.