Archive for March, 2010
Being a Landlord Can Be Increasingly Profitable
Despite falling rents and rising vacancies, the profitability of residential rental property is improving.
Investments in apartment complexes are generating annual returns of 7-8 percent immediately because purchase prices have declined.
Buying a rental property isn’t for everyone. It requires putting down at least 50 percent in cash because banks are reluctant to lend more. And buyers need to be able to hold the property for at least three to five years or more to give the investment time to gain value.
Local Market Monitor, which analyzes real estate investments, identifies these good and not-so-good markets for landlords:
Good Markets
* Columbus, Ohio
* Washington, D.C.
* Raleigh, N.C.
* Greenville, S.C.
* Columbia, S.C.
* Kansas City, Mo.
* Oklahoma City, Okla.
* Fort Worth, Texas
* El Paso, Texas
Bad Markets
* Detroit
* Cleveland
* Wilmington, Del.
* Dayton, Ohio
* Orlando
* Tampa-St. Petersburg
* Boise, Idaho
* Stockton, Calif.
* Las Vegas
* Phoenix
Source: The Wall Street Journal, M.P. McQueen (02/20/2010)
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HUD Clarifies Listing of Charges
Flat-fee disclosures combined with commissions and listed on the HUD-1 sheet get government approval in an unofficial clarification by the U.S. Department of Housing and Urban Development.
HUD attorney Helen Kanovsky explained the procedures affecting real estate practitioner commissions in a recent letter to one of the lawyers involved in an ongoing class-action lawsuit involving commissions.
Kanovsky said that the commissions and flat fees could be combined on a single line of the HUD-1 settlement sheet as long as they are spelled out in the listing agreement or the buyer’s broker agreement.
Lawyers involved in the class-action suit advise that to avoid confusion – and lawsuits – practitioners should define the commission as equal to “X” percent of the sales price plus “Y” dollars.
Kanovsky warned that if the total real estate broker fees on the HUD-1 are greater than the amount in the real estate listing agreement or the buyer’s broker agreement. HUD might review the excess charge to determine whether additional services were provided.
“Any charge for which no or nominal services are performed or for which duplicative fees are charged would violate RESPA,” she wrote.
Also, administrative fee charges without a contractual relationship with the buyer, might violate RESPA, according to Kanovsky.
Source: Inman News, Matt Carter (02/25/2010)
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Free spay, neuter program begins
Eight area veterinary offices have agreed to spay and neuter animals for free.
Applications are available now for Stomp Out Strays, a new initiative that seeks to drastically reduce the problem of animal overpopulation in Aiken County. Aiken County Animal Shelter and veterinary office staff believe the large amount of dogs and cats roaming the county as strays can be directly attributed to pet owners failing to sterilize their pets.
Unwanted litters can find their way to the County Shelter and may be euthanized if they are not adopted.
The shelter has a spay/neuter voucher program, but, because of its popularity, vouchers are being rationed to 25 a month in hopes the money allocated will last to the end of the fiscal year. Stomp Out Strays ensures that qualified households that did not get a voucher can still have their pet fixed at no cost.
Veterinarian Charlie Timmerman with Aiken Veterinarian Clinic said people have already picked up applications at the office.
“The stray population is getting out of control,” he said. “The Aiken SPCA, the County shelter and vets can’t solve it on their own. The public has to get involved. It’s going to take a group effort. We’ll give it a year and see if we can make a dent.”
Aiken County Animal Control Chief Enforcement Officer Bobby Arthurs said now residents have no more excuses.
The Aiken SPCA, which is also dedicated to minimizing the large population of unwanted animals, has volunteered to provide transportation to those who are not otherwise able to make a trip to the vet’s office.
“What the vets are doing is absolutely wonderful,” Arthurs said. “We are so grateful we have concerned people who are stepping up to help us.”
Households eligible for Stomp Out Strays must meet an annual income equal to or less than what is indicated on the application for the amount of people in the family. For instance, a household of three with a total yearly income equal to or less than $38,450 is qualified to have their pet fixed for free.
Arthurs still encourages residents to apply for vouchers at the Aiken County Animal Shelter.
Applications for vouchers and Stomp Out Strays are available at the shelter, 411 Wire Road, and at the eight participating veterinary offices.
Aiken Animal Hospital 648-4401
Ark Animal Hospital 648-4245
Aiken Veterinary Clinic 648-6886
Hammond Hills Animal Hospital 279-4090
Martintown Animal Hospital 278-1930
Palmetto Vet Calls 645-6556
Silver Bluff Animal Hospital 642-9053
Veterinary Services 648-5489
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New-Home Sales Hit Record Low
Sales of new homes declined 11 percent in January from December to the lowest level since the U.S. began keeping records in 1963, according to a report from the U.S. Commerce Department released Wednesday.
Sales dropped to an annual pace of 309,000 with the median price falling to $203,500 in January, the lowest since December 2003. At the current sales rate, there is a 9.1 months’ inventory of new homes.
New home purchases are 6 percent of the housing market.
“New-home sales may be at rock-bottom levels, but it looks like the housing correction is not over yet,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd., said before the report. “Everyone who was going to buy for the tax credit has already purchased a new home.”
Meanwhile Toll Brothers Inc., the largest U.S. luxury-home builder, narrowed its losses as new orders doubled. “The housing market took several years to recover, following the downturn of the late 1980s and early 1990s,” Chief Executive Officer Robert Toll said in the statement. “We expect this recovery to follow a similar pattern.”
Source: Bloomberg, Bob Willis (02/24/2010)
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Treasury Proposes Plan to Help Borrowers
The U.S. Treasury Department is considering a plan to improve the chance that distressed home owners will get help from federal programs.
Among other things, Treasury proposes to give borrowers 30 days to respond when they are denied a loan modification under the Home Affordable Modification Program (HAMP). During that time, the lender couldn’t auction off the property or even put it up for sale.
The proposal would demand that lenders consider all requests and even contact all borrowers who are 60 days delinquent to determine if they qualify for HAMP. Their contact efforts would have to include multiple telephone and written notices. Lenders would also be required to certify in writing that the borrower isn’t eligible.
Lenders say these guidelines would further slow the foreclosure process past the year that it takes now.
A Treasury spokesperson says the guidelines are only in the proposal stage and haven’t been approved.
Source: The Wall Street Journal, James R. Hagerty, and Associated Press, Alan Zibel (02/22/2010
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Fraud Didn’t Cause Housing Meltdown
The financial crisis was the result of home buyers’ rational reactions to misaligned incentives – not fraud, argues Todd Zywicki, a George Mason University law professor and a Mercatus Center senior scholar.
Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.
He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.
In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more home owners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.
Zywicki writes: “The problem isn’t consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”
Source: The Wall Street Journal, Todd Zywicki (02/19/2010)
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Could the Tax Credit Be Extended Again?
The pressure is increasing on Congress to renew the homebuyer tax credits for a third time.
The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.
At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.
Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.
“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
Source: The Wall Street Journal, Nick Timiraos (02/22/2010)
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Short Sales Rise in Popularity, Survey Finds
Short sales accounted for 15.9 percent of home purchases in January, according to a survey by Campbell Surveys for Inside Mortgage Finance.
Before January, the peak in short sales had been 15.1 percent in October. They declined substantially in November, probably because of the number of first-time home buyers hoping to use the tax-credit that required them to close by December 1.
While short sales take a long time to close, they typically sell for only 91 percent of listing price, making them a popular option for bargain-hunting buyers who aren’t in a hurry, the survey said.
Source: Inman News (02/23/2010)
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30-Year Mortgage Rate Tops 5 %
Average rates for conventional 30-year mortgages went up to 5.05 percent this week from 4.93 percent a week earlier, according to Freddie Mac. Interest on 30-year fixed loans had been below 5 percent for the past three weeks, close to the all-time low of 4.71 percent set in December.
The 15-year fixed rate also rose this week, with jumping to 4.40 percent from 4.33 percent.
Source: Columbus (Ohio) Dispatch (02/26/10)
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Bankers: The End of Foreclosure Crisis is Near
The Mortgage Bankers Association is seeing signs that the foreclosure crisis is ending.
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.
Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.
Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.
“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
Source: Mortgage Bankers Association (02/19/2010)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
Organizers prep for Aiken Trials
The thrill and excitement of Thoroughbred racing and the start of the Aiken Triple Crown is less than three weeks away. The 68th edition of the Aiken Trials will once again take center stage at the Aiken Training Track on March 13.
The trials are composed of six races, including contests for 2-year-olds, older horses and polo ponies.
The Aiken Trials is being sponsored by the Aiken Thoroughbred Racing Hall of Fame and Museum, AllStar Rents, Aiken Land Conservancy, Atlantic Broadband, Boots, Bridles and Britches, Vista Bank, Aiken Horse, Meybohm Realtors and the AB Beverage Co. Inc.
“Our sponsors are in place, and we have a nice television advertisement that we’re getting ready to run on Comcast and Atlantic Broadband,” said Bernadette Clayton, Aiken Trials committee. “WKSX-FM will be doing a ticket giveaway.”
There are still a few opportunities available to advertise in the Aiken Trials program, Clayton said.
A few patron spots for the Aiken Trials are still available, she said.
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