Tuesday, December 9, 2008

For Home Buyers Update


919.878.1110 office
800.333.2893 toll free
919.454.3564 direct
Stephanie@ForHomeBuyers.com www.ForHomeBuyers.com

NC Triangle Real Estate Update December 2008

Happy Holidays! In this holiday season FOR HomeBUYERS, Inc. would like to wish you much joy and happiness as you spend this time with family and friends. And let us continue to be thankful for what we have and for blessings to come.

Triangle Market Conditions: Who would have expected all the turn of events since our last email in September. The economic instability is now beginning to have a greater impact on the housing market in the Triangle as buyers seem to be taking a wait and see attitude. Also, the winter season is always somewhat slower so the market is softening more than usual. All that being said, the interest rates are dropping and we may see record lows very soon. This could be a great time to buy a home in the Triangle. The major banks are loaning money for homes. You will need to have a good credit score of about 680 and the minimal amount for a down payment of 3% with FHA until January 1 and then it goes to 3.5%. If you are eligible for a VA loan you can still get 100% financing. You can negotiate Closing Costs to be paid by the seller. If you are renting, now is a great time to buy a home. Sellers are very negotiable on their prices. In fact, there may not be any better time to buy than the next 3 or 4 months. When summer arrives people will begin moving again and prices will either stay more firm or even go up. The diversity of the job market in the Triangle keeps the housing market on a firmer foundation than most areas.

Don’t forget about the tax credit: In addition to the lower interest rates, you can take advantage of the $7500 tax credit through June 30, 2009. We provided detailed information in our September newsletter on the tax credit. If you would like more information please call us at 800-333-2893.

Visit www.ForHomeBuyers.cmo or call 919-878-1110 or 800-333-2893 to schedule a no obligation Consultation at your convenience to learn how Exclusive Buyer Representation can help you Avoid Costly Home Buying Mistakes. If you are not in the area, we can provide the Consultation by phone. We work evenings and weekends by appointment. This initial Consultation does not obligate you to us in any way. You may also REPLY to this email for an appointment to speak with one of our Exclusive Buyer’s Agent Realtors.

Monday, December 1, 2008

U.S. Steps Up Help For Homeowners

WASHINGTON -- The chief executives of Detroit's Big Three auto makers appealed in dire language for U.S. taxpayers to help their industry, but couldn't dispel doubts in Congress that have clouded prospects for a government-led rescue.

In appearances Tuesday before the Senate Banking Committee, the leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC, together with the head of the United Auto Workers union, argued the shaky U.S. economy couldn't withstand a collapse of any of the companies.

The chief executives of GM and Chrysler said they could run out of funds without the government's support. GM CEO Rick Wagoner said the package is needed to "save the U.S. economy from a catastrophic collapse." Many markets however are doing well, these markets include; Raleigh Real Estate, Durham Homes, High Point Homes, Greensboro Homes, Home Inspection, Wilson Homes, Wilson NC Real Estate, Home Warranty, Raleigh Estate Homes, Triangle Homes, Chapel Hill Farms and Farms Chapel Hill.

That the companies were convening -- "hat in hand," as Sen. Christopher Dodd (D., Conn.) said -- before a congressional panel reinforced the depth of their difficulties and the possible diminishment of their political clout. Extending a helping hand to Detroit auto makers, long a central part of the nation's manufacturing base, doesn't appear to be a given.

One question is whether the auto makers can muddle through to January when a new Congress convenes with strengthened Democratic majorities and a Democrat in the White House. The complexity of a possible intervention -- and the political divisiveness it has wrought -- could be too great to overcome this week.

On Monday, Senate Democrats introduced legislation that would set aside $25 billion to help the industry, drawing from the $700 billion fund created to stabilize financial markets. The legislation would allow the auto companies and parts suppliers to receive "bridge home loans" of at least ten years with favorable interest rates. But there is resistance among many senior Republicans and the White House. If no decision is made this week, the issue will be kicked over to the new 111th Congress.

In the late afternoon session, Republicans largely condemned the industry's request. Even some Democrats committed to helping the auto makers showed little enthusiasm for the task at hand.

While noting he backs aid, Senate Banking Chairman Mr. Dodd denounced the companies for failing to move more aggressively to reverse their sharp declines in market share. "They're seeking treatment for wounds that, I believe, are largely self-inflicted," Mr. Dodd said, adding the industry has failed to adapt and "we're all paying the price for it."

As the hearing stretched past its third hour, the top executives disclosed how much they might each apply for if Congress approved the $25 billion loan package: $10 billion to $12 billion for GM; $7 billion to $8 billion for Ford; and $7 billion for Chrysler.

The companies said they would use the money to pay employees, cover current operating costs and develop new products.

Both GM and Ford are on a pace to use up $2 billion each a month, based on their third-quarter earnings. Not getting funding immediately threatens GM most directly because the firm is operating close to its minimal funding requirements. The supply chain is shared among the Big Three, so a bankruptcy filing of one could spell problems for the other two.

Some analysts suggest GM, Ford and Chrysler can cut costs enough to survive until January. But if the U.S. auto market continues to sink, the companies' cash drain could outpace their ability to cut costs.

GM has said that without government aid, the company would run out of operating funds as early as early 2009.

Chrysler joined GM for the first time in linking its survival to a federal bailout. "Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations in the ordinary course," Robert Nardelli, the company's chairman and CEO, said. He added that the company was currently spending about a $1 billion a month more than they were taking in, leaving the auto maker with slightly more than $6 billion cash on hand.

Only Ford says that while the loan package is necessary for the betterment of the U.S.-based auto companies, it could withstand the downturn without government assistance.

The auto makers and the union sketched their companies' far-reaching impact. They also argued that Chrysler, Ford and GM are on the right track to compete with foreign-based auto makers, but that turmoil in the broader economy foiled their good planning. The companies together employ 239,000 people in the U.S.

Under pressure from senators over the issue of executive compensation, Chrysler's Mr. Nardelli said he would be willing to accept a salary of $1 a year as part of a federal bailout. Lee Iacocca made the same commitment when he ran Chrysler and secured federal loan guarantees in 1979. The chief executives of GM and Ford declined to make the same commitment.

The Banking Committee testimony is part of a broader lobbying campaign that includes parts suppliers and dealers. The executives will appear before the House Financial Services Committee Wednesday. All told, the companies are seeking $25 billion to weather the weakening economy, which has dampened demand for autos and restricted consumer access to home loans.

In another indication of the industry's problems, the world's three dominant credit insurers now consider the U.S. auto industry among the riskiest sectors for default.

Few lawmakers in either party doubt the economic challenges facing the Big Three. At issue is how -- and whether -- Congress should get involved.

Sen. Jim Bunning (R., Ky.) said a rescue proposal by Senate Democrats would give the industry "virtually a blank check," and doesn't require the companies to improve productivity and lower labor costs. "Major changes are needed, if federal dollars are to be made available," he said.

Sen. Richard Shelby (R., Ala.) said he has doubts about whether the money will be enough to meet the industry's needs: "Is this the end, or just the beginning?"

Industry supporters, such as Sen. Carl Levin (D., Mich.) want action this week. "The stakes are great and time is short," said Sen. Levin, who is scrambling to find the 60 votes needed to overcome objections in the Senate. Sen. Levin drafted the legislation that would set aside $25 billion to help the industry using bridge home loans.

To qualify, companies would have to accept limits on executive compensation, allow the government to take stock in the firms, and submit a detailed plan showing how they intend to return to sound financial footing and improve their capacity to produce fuel-efficient vehicles.

It wasn't clear whether Congress would demand management changes as a condition to any bailout, although the topic was on the minds of some lawmakers. Sen. Bob Bennett (R., Utah) predicted the jobs of hourly workers and executives are on the line as the industry restructures itself. "Everybody's going to get hurt in the process," he said, adding that the idea "that we in the Congress can prevent that from happening is wishful thinking."

The proposed assistance would be on top of $25 billion in already-approved home loans intended to help the industry retool to meet higher fuel-efficiency standards. The White House is pushing a rival plan to speed release of the previously approved home loans, by removing certain restrictions.

In testimony before the House Financial Services Committee, Treasury Secretary Henry Paulson said Tuesday the collapse of one of the auto companies "would be something to be avoided." But he said giving the industry access to the $700 billion fund isn't the answer. "I don't see this as the purpose" of the bailout program, he said.

Some Democrats aren't showing enthusiasm. Sen. Dianne Feinstein (D., Calif.) said she has problems with helping the industry without first receiving "a new business plan" that shows how the companies will return to competitiveness.

Sen. Jon Tester (D., Mont.) said the idea of additional government intervention isn't popular with voters: "People in Montana are experiencing bailout fatigue."

Tuesday, November 11, 2008

Homeowners Wait as Relief Plan Drags

Washington Disagreements over how to structure a federal foreclosure-prevention program are complicating and potentially delaying what is likely to be the Bush administration's last attempt to forestall sliding home prices.

The White House and the Federal Deposit Insurance Corp. are at odds over basic questions about the effort's size and breadth, several government officials said. The expectation that a new president could immediately redraw the design and scope of any plan has further delayed matters.

The FDIC has been developing a proposal, which some estimate could help between two and three million homeowners, designed to encourage banks to rework troubled loans by providing a partial federal guarantee for losses on modified mortgages that meet specific criteria, people briefed on the proposal said. Under the plan, the government would cover roughly half the loss on reworked loans that went into foreclosure A market that has seamed to escape the real estate slump is the Raleigh Real Estate Market.

The plan would use between $40 billion and $50 billion from the government's $700 billion financial-market rescue fund to create these loss-sharing agreements between banks and the government.

The White House is reviewing several ideas, including a new one that would further expand the role of the U.S. Department of Housing and Urban Development. Details of that proposal couldn't be learned, but it is expected to be different from that crafted by the FDIC.

The FDIC's plan was believed to be in advanced stages and some government officials felt it could have been unveiled last week. Several officials said the plan is strongly opposed by the White House, though officials there deny killing the idea.

"Anyone telling you that they know the White House position on any of the various foreclosure mitigation plans -- plural -- that we are reviewing is a liar," White House spokesman Tony Fratto said.

Treasury Secretary Henry Paulson agrees with FDIC Chairman Sheila Bair that the administration needs to take additional steps to help homeowners, but has concerns with some aspects of Ms. Bair's proposal, according to people familiar with the matter. Among his concerns is that sharing eventual losses with the government could give lenders an incentive to push homeowners into foreclosure.

Others are also worried about the unintended consequences of helping struggling homeowners. "The more you do this, you give people an incentive to default," said Alex Pollock, a resident fellow at the American Enterprise Institute. "They think, 'What am I, the sucker? Why am I paying, when if I just default, I get a better deal?'"

The FDIC's proposal has garnered support from multiple camps, as it is seen as the most aggressive in its effort to broadly modify loan terms. Still, because full details of the proposal haven't been released, it is unclear how it would prevent lenders from trying to take advantage of the new government guarantee.

"On the whole, the FDIC has consistently enjoyed a productive and collaborative working relationship with the Treasury and the Administration," FDIC spokesman Andrew Gray said.

Senate Democrats have called for the White House to support the FDIC's efforts in this area. Ms. Bair, a White House nominee who has sometimes been at odds with the administration over its response to the housing crisis, told a Senate panel two weeks ago that talks were continuing, but provided few details. Ms. Bair's term as FDIC chief extends until 2011.

Foreclosures tend to worsen the spiral of falling house prices because they depress the values of neighboring properties. They are also a central source of the problems undermining the financial system and the broader economy.

"Even an ambitious program of mortgage modifications will not prevent a further decline in house prices," said Douglas Elmendorf, a senior fellow at the Brookings Institution and a former Clinton economic adviser. "It might prevent an overshooting of house prices on the downside. But houses still look overvalued relative to people's rents or incomes, and it's going to be very difficult to sustain house prices at their current level."

White House officials are consulting with multiple industry and government groups, including Fannie Mae, Freddie Mac and HUD, people familiar with the matter said.

White House spokeswoman Dana Perino said the Bush administration would accept input from the winner of Tuesday's election and intends to move ahead quickly. "For us to wait three months, I don't think that anybody would support that."

Monday, October 13, 2008

Make your home look 10 years younger

These tips brought to you by ForHomeBuyers. ForHomeBuyers is a leading raleigh real estate dealing in the raleigh real estate industry.

Paint a room: Do any of your rooms look drab and worn, with walls and woodwork full of scuffed or fading paint? Or perhaps your wall color is dated and could benefit from a hip new palette. Maybe you have antiquated and stained wallpaper that needs to come down. Take a critical look at the color and condition of your walls, then consider jazzing them up a bit with new paint or wallpaper.

Replace pillows: Are the accent pillows on your sofas or beds starting to look a bit tattered? Are they out of style, reminiscent of a look long gone? If so, it's time to get new ones. Check out your favorite home-interior stores to see what's new.

Freshen wood furnishings: In the hustle and bustle of daily life, wood furnishings get dented and dinged. Now is the time to get a stain stick and touch up all your wood pieces, covering up those boo-boos that make them look older than their years.

Do some deep cleaning: There's nothing like a thorough deep cleaning to make your home look newer. Put on your grubby clothes, turn on some great tunes and get to work. Scrub your walls and woodwork, polish your silver, scour the grout in your kitchen and bathroom, and wash windows.

Weed out artificial plants: While I love faux greens, they are dust magnets. After a few years, they get filthy and faded. So do some interior weeding, tossing the fakes you've had on display for years. When you replace them, you're going to be so blown away by how much better today's faux greens are that you'll wish you'd rooted out the old plants earlier.

Edit accessories: Today's trend in interior design is for a lighter and leaner use of accents, using fewer pieces to make a bold statement. As you evaluate your displays, remove pieces you aren't crazy about and find new ways to showcase the select items you are crazy about.

Replace fixtures. Take a long, hard look at your light fixtures, faucets and the hardware on your cabinets. Do you still love them as much as you did when you moved in? If not, it's time to replace them with today's new styles

Open yourself to new window treatments: Window coverings take a beating from sun and dust. And when they get dated, they age the look of your entire home. Sometimes simply hanging new curtains will dramatically update the look of a room. I'm in the process of doing just that in my kitchen. The window valance above my sink has gone limp, so this fall I'm going to replace it. I'm having as much fun thinking through my window-treatment options as I will looking at my new coverings once they are up.

Other things to consider:

- Do you have a home warranty?

- Is the house on a septic system?

- Does the home feature a custom bathroom design?

- Does the master bathroom feature a custom shower enclosure?

- Are you working with a home buyers agent?

Nervous about buying a house?

Home Buying Tips and Help for Home Buyers

The single most important step that any Raleigh home buyer can take is to contact Ann Davis of FOR Home BUYERs. Ann Davis is the leading Buyers Agent in RTP and one of the top Raleigh real estate agents.

Ann Davis works exclusively for home buyers and helps new buyers work through the complex RTP real estate market. Contact Ann Davis and let her represent you throughout the entire home buying process.

They're a couple in their early 30s -- a computer technician married to a bank teller. They have stable jobs, a down payment in the bank and an intense desire to escape their Charlotte condo for a luxury home in Raleigh North Carolina.

In fact, the couple has picked out their ideal property -- a sprawling ranch-style house on a full acre. Plus they're convinced this is an opportune time to buy.

Still, the couple is racked with doubts and have yet to make a serious bid on the property. Are they crazy to consider buying in so tumultuous a real estate market? Their parents think so and call them often to urge that they hold off.

This couple's situation illustrates the pervasive confusion affecting prospective homebuyers at a time of economic uncertainty, says a real estate broker, who is also the author of "A Survival Guide to Buying a Home."

One manifestation of buyer ambivalence is a common phenomenon: the withdrawn bid.

"People search around and around for the perfect house at a bargain price. When they find it, they're super excited and run to their agent's office to write an offer. But an hour later they tell the agent to tear up their bid," the broker says.

Of course, buyer ambivalence is understandable -- given the economic situation in the country. Turbulence on Wall Street, along with high gas and food prices and job jitters are combining to cause insomnia for many once-confident members of the middle class.

"It's difficult to get a handle on home values now -- or to accurately project what real estate will be worth in the future," the real estate broker says. Even so, he insists that those who get a rock-bottom price on a home in a desirable community will one day be glad they acted now rather than waiting.

Here are pointers for those now contemplating a home purchase:

Clarify your reasons for making a purchase.

Fear is a powerful force that can restrain people from going forward -- even when they believe it's in their interest to do so. But those convinced that now is a good time to realize a long-held housing dream shouldn't let ungrounded fears inhibit them, says another real estate broker and former president of the National Association of Exclusive Buyer Agents.

"The main thing is to go into a purchase with your eyes wide open, plus every piece of solid information you can obtain," the other broker says.

Keep in mind, though, that there could be reasons why it might be imprudent for you to buy now, including near-term employment prospects or perceived job security.

Get a strong mortgage lender and RTP home buyers agent on your team to build confidenc e.

It's no secret that home lenders now want to be doubly sure any home loan they originate will be solid. This means you'll need to be unusually well-prepared to answer the lender's request for documents, the other broker says.

"All your paperwork must be in order. I recommend that even before you go look at homes, you sit down with a Ann Davis and get all of your paperwork in order."

Also, more lenders are now demanding proof that the funds you've amassed for your down payment have been in your savings or checking account for some time. That means you'll need to produce account statements showing the money is truly your own, which gives you a stronger stake in the home or real estate property you buy.

If you're self-employed, you can now expect your lender to do a rigorous review of documents related to your business.

But the time you spend documenting your eligibility for the home loan will be worth it if your lender gives you a "pre-approval" letter. This you can use as a bargaining chip when negotiating for the home or real estate property of your choice.

Take your time choosing a home -- within reason.

Many neighborhoods now have an unusually large number of for sale signs. This huge array of choices gives homebuyers yet another reason to delay commitment to any one property.

"If this is the right time for your family to buy a house, don't let the negative atmosphere around real estate discourage you. Use the abundance of choices to help you get precisely what you want," the other broker says.

Here are some other things to consider when buying a home:

- Do you have a home warranty?

- Is the house on a septic system?

- Does the home feature a custom bathroom design?

- Does the master bathroom feature a custom shower enclosure?

Monday, September 29, 2008

Most Reverse Mortgages Dodge Credit-Crisis Woes

I am considering taking out a reverse mortgage in the near future. Is there any connection with the mortgage problems that have been in the news? Could those problems affect my reverse mortgage in any way? I could use a reverse mortgage to pay off my mortgage balance. I have been to several sessions on reverse mortgages and understand the program. I just want to make sure that all these problems that have been arising in the banking industry will not affect me.
—Marie Bell, San Diego

If you stick with a government-backed reverse mortgage, your payments are guaranteed. And if you take your reverse mortgage as a lump-sum payment, there is no uncertainty. So-called proprietary loans typically offer more flexible terms and aren't backed by the government. But so far payments have continued during the capital crunch.

Reverse mortgages can help older homeowners with mortgage payments, home maintenance or property taxes, among other expenses. Instead of the borrower making payments to the lender, as with a regular mortgage, the lender makes a payment, or payments, to the borrower. The borrower keeps control of the house and doesn't have to pay back the loan as long as he or she lives there. When the homeowner dies or moves out, the loan is typically paid off by selling the house, and any money left over goes to the homeowner or the homeowner's estate.

Fees are typically steep -- up to 7% of the home's value. The loans are generally limited to people who are age 62 or older, and borrowing limits are capped based on where the homeowner lives. There's a good primer at reversemortgage.org.

The most common type of reverse mortgage is a Home-Equity Conversion Mortgage, or HECM, in which the Federal Housing Administration insures lenders' and borrowers' risk. Those loans, backed by federal-government insurance, are secure. But if you're considering taking out such a loan, try to wait a few weeks: A housing law enacted earlier this year raised the lending limits for the HECM product. On or about Oct. 1, the Department of Housing and Urban Development is expected to announce those limits and start using them, says Peter Bell, president of the National Reverse Mortgage Lenders Association, a trade group in Washington, D.C.

There are also proprietary reverse mortgages -- often with higher lending limits (and, at times, a minimum-age requirement of 60) -- that aren't government-backed but which get bundled and sold to investors. Much of the securitization business had been handled to date by a unit of Lehman Brothers Holdings Inc. Although Lehman's holding company filed for bankruptcy-court protection Monday, the unit that securitized reverse mortgages "isn't part of the bankruptcy filing," Mr. Bell says. "So for the moment, there's no issue."

Still, it is getting tougher to find proprietary reverse-mortgage products. A year ago, there were 15 such products. "As of last week we were down to one or two," Mr. Bell says.

By: Kelly Greene
Wall Street Journal; September 20, 2008

Thursday, September 18, 2008

Fixed-Rate 30-Year Mortgages Fall Below 6% on Bailout News

Rates on 30-year fixed-rate home mortgages dropped substantially this week, falling under 6% for the first time since May in the wake of the government takeover of Fannie Mae and Freddie Mac, according to Freddie Mac's weekly rate survey.

The national average for the 30-year fixed-rate mortgage was 5.93%, down from 6.35% and 6.31% a year ago, according to Freddie Mac's weekly survey. The rate is down nearly 0.6 percentage point over the past months.

"This means that the monthly principal and interest payment on a new $200,000 loan is over $76 lower than a month ago," said Frank Nothaft, Freddie Mac chief economist, in a news release. He expects the movement to help spur home purchases and loan refinancing in coming weeks.

Fifteen-year fixed-rate mortgages averaged 5.54%, down from 5.90% and 5.97% a year ago.

Rates fell substantially earlier this week, after news of the government's bailout of Fannie Mae and Freddie Mac.

"Lower rates have occurred at an opportune time, as the July pending sales data from the National Association of Realtors were off 3.2% from June," Mr. Nothaft said. "Refinance applications are up 18% over the past three weeks through September 5th, indicating that refinance activity has already begun to pick up."

The MBA reported that mortgage applications filed are going up.

Wall Street Journal; September 12, 2008

Wednesday, August 20, 2008

FBI Probes Unusual Incentives for Home Buyers

Investigators Ask Whether Payments Misled Lenders

When home sales began to slow at the start of the downturn, home builders offered buyers incentives -- instead of reducing prices -- to stimulate demand. The incentives included cars, tuition and credit-card payments, and even cash.

Now, federal investigators are questioning whether some of those incentives misled lenders and caused them to write mortgages that were artificially inflated, contributing to today's home-price crash.

Using incentives to sell homes has long been a marketing tool for builders. When properly disclosed and structured, the practice is legal. But the Federal Bureau of Investigation is looking into allegations that home builders, brokers and appraisers defrauded lenders by not disclosing unusually large incentives to buyers, which could have added as much as $100,000 to the price of a home.

Housing analysts say incentive schemes prolonged the housing boom in hot markets like Las Vegas and, consequently, have made the downturn all the more severe.

The FBI wouldn't name individuals or companies under scrutiny, but confirmed that it is looking at cases where the disclosures of incentives "haven't made it all the way to the ultimate lender," says William Stern, financial crimes supervisor for the FBI in Palm Beach County, Fla., and the bureau's former national mortgage-fraud coordinator.

Interviews with real-estate agents, home buyers and former employees at home builders describe an industry where competitive pressures fueled unusually creative giveaways in a last-ditch attempt to prevent price cuts. Home builders hate to cut prices, not only because it reduces profit, but also because their customers who paid full price complain.

In the Las Vegas division of Dallas-based Centex Corp., the home builder paid off car loans, credit-card bills and mortgage payments on existing homes to entice new buyers on homes priced between $350,000 and $550,000. Those payments weren't always disclosed to lenders.

"You weren't buying a house. You were buying a package," says Dana Ellis, who worked as an escrow manager for Centex from 2004 to 2006. To qualify, Centex required the buyer to use the company's in-house mortgage unit to originate the loan, and the loan application included an incentive "addendum" that listed the incentives but wasn't always sent to the lender. "They weren't disclosing any of this. That was on separate paper that was pulled," she says.

In some states these incentives are not available. The state regulators are much more active and enforce laws that prevent home builders from offering buyers incentives that lead to mortgage and financial problems.

In reviewing the hot real estate markets nationwide, one state, North Carolina, is home to four of the top ten hottest real estate markets in the country.

North Carolina, unlike California and Las Vegas, Nevada, does not have "flipper" markets. Also North Carolina has a diverse employment base and many jobs are available is a wide range of industries.

The employment opportunities are vast in North Carolina and are fueling demand for homes and real estate throughout the entire state of North Carolina.

The relocation market in North Carolina, especially Raleigh Relocation opportunities increases demand and results in more consistent pricing levels.

North Carolina has a very strong network of real estate professionals that help homebuyers avoid costly mistakes that can lead to foreclosures and financial difficulties.

Let's examine some of North Carolina's hottest real estate and the proven professionals that help buyers and sellers make good decisions:

Raleigh Real Estate Agency: An exclusive buyers real estate agency that is based in Raleigh, North Carolina and dedicates themselves to representing you through the entire buying process.

Winston Salem Real Estate Agency: Another established real estate agency in the area. The Winston Salem Real Estate Agency provides custom profiles of homes for sale in Winston Salem, Greensboro, Kernersville, and the neighboring Piedmont Triad area of North Carolina.

Greenville Real Estate Agency: Part of Our Town Properties, the Greenville Real Estate Agency is will to help its clients by providing them with tips about buying local real estate, Greenville relocation, and how to handle Greenville real estate mortgages.

In many cases, an exclusive buyers agent could have helped homeowners in Nevada, California, Michigan, and Ohio avoid the many traps that national home builders such as: Centex and Beazer Homes often make available through deceptive marketing incentives.

Centex says that the program was confined to about 50 sales and was shut down in June 2006, about six months after it began. Centex averaged 63 home sales a month for the year beginning April 2006. "These incentives did not reflect standard corporate practice and, once discovered, the practice was immediately halted," Centex spokesman David Webster says. Centex says only one of the loans was government-backed, through the Veterans Administration home-loan program, and the builder has promised to stand behind all of those loans.

Elsewhere, developers offered "sweat equity," or payments for buyers to receive home improvements such as landscaping. "You're basically getting banks to give you a cash advance," says Chip Hickman, the general manager of Easy Street Realty in Las Vegas. He said such programs weren't heavily advertised and were offered by many area builders, although he declined to name them. "It was more sales agents in the model home saying, 'Look, tell me what you need and I got a lot of money to play with.' "

There aren't any strict limits on incentives, but they could run afoul of federal regulations if they cause the mortgage to increase by more than the cost of the incentive. "It's a phantom incentive to mask it in an excessive loan," says Brian Sullivan, a Department of Housing and Urban Development spokesman.

Stronger due diligence by banks might have caught some of these problems. Banks, however, say they relied on professional appraisal companies to insure property pricing. Mortgage-fraud experts say appraisers sometimes cooperated with builders because it was the only way to get business. Appraisers say that determining the value of new homes is more difficult because comparable sales figures are provided by builders.

In some cases, developers gave outsized commissions to real-estate agents who then gave that money back to the buyer. The average commission on a home sale nationally was 5.2% last year, up from 5% in 2005, according to a survey by Real Trends, an industry newsletter.

At the height of the real-estate boom, commissions in Las Vegas regularly reached double digits, real-estate agents say. Kurt DeWinter, a Henderson, Nev., agent, received a $70,000 commission on a $550,000 home from Beazer Homes USA Inc. two years ago. He says he gave half of that to the buyer.

"They didn't care what you did with the money as long as the buyer paid the price they wanted for the house," says Mr. DeWinter, who personally went into foreclosure in that same neighborhood on a $500,000 Beazer home. He says he received a $50,000 incentive from the builder, which he used for his down payment. Beazer didn't return calls seeking comment.

Some builders continue to make generous offers. Wagner Homes Inc., a local home builder, advertises in big capital letters at the top of a flyer "$130,000 commission any way you like it!" for homes in developments like "Dawn Day Fusion," a northwest Las Vegas subdivision that offers homes with Asian-inspired architectural flourishes. New homes listed there in mid-July for $530,000 even though similar model homes in that development sold for $400,000 two years ago.

"A fee that high has got to raise a bunch of flags," says Kenneth LoBene, HUD's Las Vegas field director, because builders typically reduce the price of the home rather than offer such large incentives and because homes in that subdivision have sold for as little as $240,000 in foreclosure auctions. Representatives of Wagner Homes didn't return calls seeking comment. Steve Hawks, a Las Vegas real-estate agent, points to offers like this as one that a commercial lender wouldn't back if properly disclosed. "You find me an institutional investor that's going to buy this loan," he says.

Monday, August 18, 2008

Builders Feel Pinch of Key Omission From the Housing Bill

FHA's Elimination Of Down-Payment Gifts Could Dent Demand

Although a bill aimed at reviving home sales and curtailing foreclosures is about to become law, some of its provisions are proving a drag for the nation's large home builders.

Despite a rally Tuesday, the Dow Jones Wilshire U.S. Home Construction Index, which tracks the stocks of major builders, has fallen about 8.5% since President George W. Bush indicated last week that he wouldn't veto the bill that has been approved by Congress.

There have been months of intense lobbying by the building industry, but analysts say the legislation is a mixed bag for the new-home market. On the bright side, the bill shores up mortgage giants Fannie Mae and Freddie Mac, which should help restore some confidence in the mortgage market. It also provides a $7,500 tax credit to stimulate demand among first-time home buyers.

But for the builders, the bill's elimination of seller-funded down-payment assistance on mortgages backed by the Federal Housing Administration is a big loss -- one that could eliminate as many as one in 10 home buyers from the market, according to an analyst.

Starting in October, buyers using FHA loans can no longer accept down-payment "gifts" that are ultimately funded by the home seller, often a builder. Currently, the FHA allows a nonprofit group to gift the down-payment to the buyer. The nonprofit group is then reimbursed by the builder -- a practice the housing bill would stop.

Seller-funded down-payment assistance, which essentially allows buyers to purchase homes with little or no money down, has been filling the void left when the subprime-mortgage market all but vanished in 2007.

FHA officials have said loans that include the down-payment gifts are incurring higher default rates than FHA loans without the gifts. Builders say the gifts make homeownership possible for low-income buyers who have been unable to save money for a down payment.

Miami-based Lennar Corp. used down-payment assistance on 33% of the mortgages it originated in the second quarter, while Ryland Group Inc. said 18% to 20% of its buyers used down-payment assistance during the first half of the year.

"We believe a material portion of these people won't be able to find alternative mortgage-financing options," says Michael Rehaut, a housing analyst at J.P. Morgan. "This likely will result in an additional segment of demand leaving the market."

The elimination of down-payment gifts could bar as much as 10% of the nation's home-buyer pool and as many as 25% of buyers in lower-priced markets, such as Texas, where the gifts are more prevalent, according to housing researcher Zelman & Associates.

Complicating matters further for the builders, the housing bill would increase the down-payment requirement on FHA loans to 3.5% from 3%. Previous versions of the measure had lowered the down payment to 1.5%.

"There will undoubtedly be some impact, but we believe the buyers will adjust and the market will adjust," says Tim Eller, the chief executive of Centex Corp, which said that 25% of its sales in its fiscal year ended March 31 involved down-payment assistance.

In the absence of down-payment gifts, Mr. Eller says, his company can put buyers on a savings plan. In addition, he says that not everyone who uses down-payment assistance is necessarily unable to come up with a down payment.

Mr. Eller also is hopeful that a tax-credit provision in the legislation will help stimulate demand. "We know that this is no silver bullet, but it will have some stimulative impact," he say.

The tax credit mirrors a similar program in the 1970s that Mr. Eller says allowed him to buy his first home, a condominium outside Chicago. But unlike the credit Mr. Eller used in 1974, the credit proposed in the current housing bill has to be paid back over 15 years, making it more like an interest-free loan.

And a home buyer would typically collect a credit after they file their taxes. That may not help buyers who need a cash infusion -- like a down-payment gift -- at the time of the sale.

It is possible that builders could use their mortgage businesses to lend the tax credit to buyers at the house closing, and then be reimbursed after the buyer files their taxes. But that puts the builder at risk if the buyers default on these loans -- a risk the builder's mortgage units aren't necessarily designed to deal with.

"The primary purpose of the builders' mortgage subsidiaries is to get mortgage origination fees," J.P. Morgan's Mr. Rehaut says. "They don't want to take on default risks."

On a brighter note, builders say the housing bill could boost higher-end sales by raising the conforming-loan limits on Fannie- and Freddie-guaranteed loans and FHA loans to a maximum of $625,000 in some high-priced areas.

But many of those higher-end sales will depend on whether buyers can sell their current homes, often to first-time home buyers, which is why builders say the tax credit will help the overall market.

"First time home buyers can help bring back stabilization" in the market, Centex's Mr. Eller says. "It's a very large cohort, and they can have a big impact."

By: Michael Corkery
July 30, 2008

Tuesday, July 8, 2008

HUD Chief Is Optimistic on Housing Accord

The White House’s new point man on housing said Wednesday he was “very optimistic” the Bush administration and lawmakers could reach an agreement on a huge package to backstop the flailing mortgage market.

“Something can be worked out,” U.S. Housing and Urban Development Secretary Steve Preston said in his first interview since taking over the agency this month. “I don’t know if it will be, but something can be worked out.”

Mr. Preston’s comments on housing are significant because the White House has threatened to veto sweeping legislation to address the housing crisis. Legislation is pending in the Senate. The House passed a separate bill in May.

Both bills would allow hundreds of thousands of qualified homeowners to refinance into affordable, government-insured mortgages. The bills would overhaul supervision of Fannie Mae and Freddie Mac and give HUD more flexibility to operate its mortgage-insurance division, known as the Federal Housing Administration.

Senate Democrats Wednesday were trying to resolve procedural fights before they could pass their version of the legislation, with Senate Banking Committee Chairman Christopher Dodd (D., Conn.) blasting Republicans for delaying a final vote on the measure. Democrats had hoped to pass the measure this week, but a final vote appeared likely to slip until after the July 4 recess. Still, the legislation is expected to pass easily, potentially with enough votes to overturn a veto.

The Bush administration has wavered on the bill, praising provisions to boost supervision of Fannie Mae and Freddie Mac but raising concerns about some of the new spending, such as $4 billion in grants for localities to buy foreclosed property.

White House spokeswoman Dana Perino said Wednesday the White House was “nearer to having something we could work on.”

Mr. Preston characterized the policy discussions as “a turning point in the history of our mortgage markets, and what government’s role should be, and how we are going to enable governmental institutions to fulfill that role.”

The roles of Fannie Mae, Freddie Mac and FHA have surged in recent months as homeowners have looked to government-backed programs for more funding. Previous sources of funding for mortgages, notably the market for certain securitized loans, have dried up in recent months amid a broader credit crunch.

One provision of the Senate bill that Mr. Preston said still concerns the Bush administration is the possibility that it could prevent HUD from charging different premiums to homeowners based on the amount of risk the homeowners pose to HUD’s insurance program. Mr. Preston said this could prevent some homeowners from qualifying for FHA insurance and could require fees for all homeowners to increase. Some Democrats have countered that allowing risk-based pricing could penalize financially strapped lower-income borrowers.

Mr. Preston said he was hopeful these issues could be settled.

Looking ahead, House and Senate lawmakers have ramped up negotiations to resolve their differences. Sen. Dodd and Sen. Jack Reed (D., R.I.) met Tuesday afternoon with House Financial Services Committee Chairman Barney Frank to go over differences in the bills, though details of their talks were kept private.

Separately, Mr. Preston said he has ordered an internal review of the way the agency awards contracts, an issue that dogged his predecessor, Alphonso Jackson, amid allegations that contracts were improperly awarded. Mr. Jackson has denied wrongdoing. At his recent Senate confirmation hearing, Mr. Preston said he would report back to the Senate Banking Committee on the results of his internal inquiry.

Wednesday, June 25, 2008

Raleigh Voted # 1 City For Young Homeowners

Youthful spirit and economic vitality go hand in hand. Communities with large concentrations of young adults are more likely to prosper, according to a new bizjournals study. The correlation is driven home by the study's comparison of metropolitan areas that skew young or old.

Group No. 1 consists of the 11 major markets where more than 25 percent of all residents are 18 to 34 years old. Group No. 2 contains 14 metros where fewer than 22 percent are young adults. Here's how they match up:

-- The young markets have been experiencing population growth of 2.1 percent per year since 2000. That's seven times the growth rate of 0.3 percent for the old markets.

-- The annual rate of job growth is 1.9 percent in the young metros compared to 0.4 percent in their older counterparts.

-- Personal income is climbing at a median pace of 3.4 percent per year in the young markets. The corresponding figure is 2.8 percent on the old side.

It's clear that having a high percentage of young adults can be an indicator of economic success. It tells marketers where to concentrate their efforts, entrepreneurs where to start businesses, and college graduates where to look for work. Raleigh is also the number one city for Raleigh Web Design, Web Design Raleigh, SEO Raleigh, Web Development Raleigh and Raleigh Web Development.

But which markets offer the best prospects for people in the 18-34 age range these days? Bizjournals sought the answer by analyzing growth patterns, income levels and other key statistics to rank the nation's 67 largest metros as BEST PLACES FOR YOUNG ADULTS. These are the five places currently offering the best job opportunities for young adults:

-- 1. Raleigh: This is the only market to finish in the top 10 in three key categories: population growth, job growth, and the percentage of young adults with college degrees. Raleigh is also blessed with a relatively low cost of living.

-- 2. Austin: Twenty-nine percent of Austin's residents are between the ages of 18 and 34. That's the heaviest concentration of young adults in any major metro.

-- 3. Washington: The District of Columbia can be an expensive place to live, but paychecks for workers in their 20s and 30s are among the highest in the nation.

-- 4. Las Vegas: The economy has slowed in Las Vegas in recent months, yet it remains the national leader in job growth since 2002, averaging 4.9 percent per year.

-- 5. Phoenix: The unemployment rate for 18- to 34-year-olds in Phoenix is 5.4 percent. That's three full percentage points below the U.S. average for the same age group.

Rounding out the TOP TEN in bizjournals' rankings of employment prospects for young adults are Salt Lake City, Charlotte, Seattle, Orlando and Houston. Bizjournals analyzed 67 major metropolitan areas, searching for qualities that would appeal to workers in their 20s and early 30s. THE FORMULA gave the highest marks to places with strong growth rates, moderate costs of living, and substantial pools of young college-educated adults with jobs.

The Sunbelt dominates the upper echelon in the national rankings. Eight of the 20 best markets for young adults are in the South, and seven are in the West.

Four of the five remaining slots are occupied by Eastern communities, while Minneapolis-St. Paul is the only Midwestern metro to make the top 20. The competition to attract new and recent graduates to these labor markets is intensifying, partly because young adults are getter choosier. "College-educated young people are looking for greater control over where they live," concluded a 2006 study by The Segmentation Co., a national research firm that surveyed 1,000 adults between the ages of 25 and 34. All of these respondents held college degrees and had lived in at least two communities since leaving school.

Quality-of-life issues are of prime importance to these mobile young workers. They told The Segmentation Co. that they're looking for places that offer strong professional opportunities, have good schools, and are affordable and clean. The same factors were important components of bizjournals' 10-part formula, which analyzed each market's job-growth rate, education levels, and median rents, among other indicators.

The least desirable market for young adults, according to bizjournals, is New Orleans, sitting dead last in 67th place. New Orleans, which is still struggling to recover from the damage inflicted by Hurricanes Katrina and Rita in 2005, has the worst long-term rates of job and population growth in the study.

Friday, May 30, 2008

New Raleigh Condos at Palladium Plaza

Progress Energy's newest tower shot up from Davie Street with all the hoopla one might expect for a city that was starving for new life back in 2004. You couldn't miss it.

But its prominence obscures a building that quietly slipped in behind it: Palladium Plaza. The condominium project's little-noticed arrival at the southwest corner of Davie and Blount streets reflects how comfortably its design fits into the city's landscape.

Even six months after construction finished, Progress employees -- who work in the tower next door -- ask how long Palladium has been there, according to project managers working onsite. Other observers ask what the building was before it was condos, only to be surprised by the answer: a few small buildings, which were demolished. If you are considering a new home, condo, or townhome in the greater Raleigh market; it pays to work with an expert buyers agent and Raleigh realtor.

But behind the new building's quiet presence are several distinguishing characteristics that speak volumes about the direction of downtown.

WHAT IT IS: Palladium Plaza stands five stories on a narrow acre. It includes 66 loft-style condominiums, three street-level retail spaces and outdoor common areas. It has a small parking deck and shares additional parking with Progress Energy in another deck. Units range from 690 to 2,100 square feet in several layouts. Prices have ranged from $150,000 to the high $400,000s.

WHO LIVES THERE: There are many first-time homeowners. Single men and women and young couples make up the majority.

HOW IT FITS: White Oak President Roland Gammon calls the project "edgy," which is an apt description on a couple of levels: Palladium is on the southeastern edge of the center-city's renewal, and its interior -- with exposed pipes and concrete walls, high ceilings, big windows and stainless steel fixtures -- offers a fresh, urban feel.

The narrow tract upon which Palladium was built didn't allow for much definition in the face of the building. But hunter-green trim, concrete-and-iron balconies, exterior light fixtures and shadows cast from trees that line the walkway add visual depth.

The project is among several recent changes on a six-block cluster southeast of the intersection of Fayetteville and Martin streets. Other great real estate markets include Williamsburg Real Estate, Williamsburg Realtor, Realtor Williamsburg, Realtor in Williamsburg, Realtor Williamsburg VA, and buyers agent in Williamsburg.

Palladium is on the lot east of the new Progress Energy tower.

On the block across Davie Street, Cary developer Hamilton Merritt and Cherokee Investment Partners of Raleigh want to build a pair of towers including an eco-friendly mix of shops, offices, hotel rooms and residences. The project, called Edison, would surround a 1,250-space parking deck being built on the block.

To the northwest, Highwoods Properties is finishing RBC Plaza, the Triangle's tallest tower.

To the northeast, 96-year-old City Market is poised for upgrades.

WHAT IT ADDS: Palladium includes several live-work spaces on the street level. The building's homeowner agreement allows for such units that can double as public business space and residences.

HOW IT IS DOING: Despite slowing home sales across the region, Palladium has fared well. At least 16 units have yet to sell. And prices are holding up. The last 10 Raleigh Condo units sold went for $224 per square foot, up 2.3 percent from the first 10 units sold. Three townhome and condo units have been re-sold at an average increase of 9.5 percent. In other North Carolina markets, such as Charlotte, Willimington, and Wake Forest Condominiums have been moving at above market prices. Glenmore Garden Villas has Charlotte condos and new townhomes that are priced from the low 400's.

Palladium's closest new-condo rival, The Hudson at 319 Fayetteville St., started closing sales in early 2006. The last 10 units to sell there sold for an average of $223 per square foot, which is 7.9 percent less than the first 10 units. There are still at least 10 unsold Hudson units.

Palladium has benefited from timing: It was finished long enough after competitors such as the Dawson on Morgan were mostly sold out, but long before competitors such as 222 Glenwood, Hue and West on North are scheduled to be complete.

But sales have slowed since closings began a year ago. Only three Palladium condo units have sold this year, property records show. Condos in Raleigh typically move slower than homes. Home sales in the Triangle are hotter than nearly any other market in America. Raleigh is not being hit with foreclosures and home walk-aways as much as markets like Phoenix, Las Vegas, Orange County, Calif., Detroit, and most of America. Real estate and home sales across the state of North Carolina including Winston Salem homes and Cary homes, Apex homes, Clayton homes, and Durham homes are all pacing ahead of last year.

Tuesday, May 27, 2008

Local home prices rise 5%

Housing prices in the Raleigh area rose by nearly 5 percent in the last 12 months, according to new federal data.

The numbers come from the Office of Federal Housing Enterprise Oversight, the group that oversees the government-backed mortgage buyers Fannie Mae and Freddie Mac. Across the country, OFHEO says, prices were flat over the past 12 months.

OFHEO's numbers put Raleigh 30th among the hundreds of metropolitan statistical areas in the country for home price increases.

But the increases come at a time when sales themselves are flat, with buyers waiting for the market to hit bottom. Triangle home sales dropped by 24 percent in April, the Triangle Multiple Listing Service recently reported.

MLS also said that the sale price of an existing home fell 1.5 percent in April from a year earlier. MLS' data include nearly all home sales in the region, however, while OFHEO's figures only include mortgages that qualify to get bought by Fannie or Freddie. That excludes most "subprime" mortgages to borrowers with poor credit - by far the worst part of the market.

OFHEO's numbers also include refinancings and home appraisals.

Home prices in the Durham area rose by 3.92 percent in the past 12 months, OFHEO says.

Across the state, prices in Charlotte increased by 6.16 percent. Asheville's home prices were up by 4.52 percent, Durham's by 3.92 percent, Winston-Salem's by 3.82 percent, Greensboro's by 2.76 percent and Wilmington's by 1.30 percent.

Triangle Business Journal; May 22, 2008

Thursday, May 22, 2008

Newsweek Names Local High Schools Among The Best

Raleigh Charter School and Enloe High School again rank among the top 75 on Newsweek magazine's list of the top public high schools in the country.

Raleigh Charter School ranks No. 27 and Enloe is at No. 72 on the list, which appears online at newsweek.com and features in the May 26 issue of the news magazine. A year ago, Raleigh Charter was No. 20, while Enloe was No. 56.

Newsweek's list ranks schools based on the number of college-level exams taken at a school in a given year. Specifically, the magazine looks at the number of Advanced Placement, International Baccalaureate and Cambridge exams taken by all students and divides that figure by the number of graduating seniors.

There were 5.238 college-level exams taken for every graduating student at Raleigh Charter in 2007, the list says. The figure was 3.979 at Enloe.

Newsweek's list is controversial. Parents and school administrations who don't like the list say that measuring college-level exams gives an incomplete picture of school quality.

Jay Mathews, the Washington Post staff writer who puts together the report, agrees that it's not perfect. But, he said in a recent Post article, the list "captures, in a way other school statistics do not, a different attitude about students in the schools that make the list. Those schools turn out to have principals and teachers who are trying hardest to raise the achievement of each child, with college as a useful goal for all until students are old enough to decide what they want to do."

This year's Newsweek list, which features data from 2007, ranks the more than 1,300 public high schools across the country with an exam-to-student ratio of more than 1.

Other Triangle schools to make the list were:

* East Chapel Hill High, No. 145;
* Chapel Hill High, No. 237;
* Pinecrest High in Southern Pines, No. 292;
* Jordan High in Durham, No. 299;
* Durham School of the Arts, No. 305;
* Needham Broughton High in Raleigh, No. 443;
* Green Hope High in Morrisville, No. 594;
* and Wakefield High in Raleigh, No. 1163.

Triangle Business Journal; May 19, 2008

SAS forming subsidiary to help with homeland security

SAS is launching a subsidiary that will focus on providing data analysis tools to the federal government, especially the homeland security and intelligence agencies, the Cary software maker announced Monday.

The subsidiary, which is yet to be named, will be based in Cary and will be organized over the next several months, says SAS spokesman Trent Smith. More than 50 SAS employees will be allocated to the subsidiary, which will hire an -as-yet-to-be-determined number of additional employees with the security requirements needed to assist intelligence and homeland security efforts.

Tom Mazich, SAS' vice president of government operations, will head the new subsidiary, which will look to supply federal agencies involved in homeland defense with software that allows them to share information in real time, to analyze that information and to make better-informed decisions. Improved information sharing and analysis could have helped to prevent the terrorist attacks of Sept. 11, 2001.

"The events of 9/11 were a wake-up call: We need to do a better job of understanding potential threats to our country. There is so much data from so many different sources - human intelligence, 'open source', and even that gathered by technology - that is significant to safeguarding the United States," Mazich said in a news release. "The intelligence and homeland security communities must be able to make sense of all this data in a timely manner so they can make critical decisions. SAS technology will be a major contributor to helping the government fully understand its information."

While all 15 federal departments use SAS software, but the company believes a dedicated subsidiary will serve the market better.

SAS, which posted 2007 revenue of $2.15 billion, has 10,619 employees worldwide, 4,244 of them in Cary.

By: Jeff Drew
Triangle Business Journal; May 19, 2008

Tuesday, May 20, 2008

Home-Price Decline Spreads

Number of Metro Areas Hit Reaches Three-Decade High; Toll Brothers Feels the Pinch
In the latest sign that the housing market is deflating at a record pace, the National Association of Realtors said prices declined in more metropolitan areas in the first quarter than at any time in the past three decades.

The trade group said median prices fell in about 100 metro areas -- the most since the trade group began keeping such records in 1979. It also said Tuesday that median home prices rose in 48 metro areas -- the lowest number on record. Nationally, the median home price fell to $196,300, down 7.7% from a year ago.

Lawrence Yun, the group's economist, said the sales-price data are being distorted by foreclosed homes and other distressed sales, which are fueling price drops in certain neighborhoods, while the lack of available so-called jumbo mortgages for high-priced homes has resulted in fewer sales in upscale neighborhoods. The upshot is that the median price for a metro area may be falling, but the prices may very sharply "neighborhood by neighborhood," Mr. Yun said.

Still, high-end homes are clearly under some price pressure. Luxury builder Toll Brothers Inc., which reported preliminary second-quarter results on Tuesday, said its average home price dropped 17% to $590,000 from a year earlier and was down 7% from the previous quarter, partly because of increased incentives. Toll says it is offering most incentives on homes that were built for buyers who ultimately backed out of their contracts. The builder also said its average price was lower because it sold fewer homes in high-price markets such as California and Manhattan.

Toll says one of the biggest problems is that many buyers are putting down deposits but end up canceling because they fear they won't be able to sell their existing home. "They go to their friends and neighbors and say, 'We just bought a new home,' and everybody says 'What? Are you crazy? Prices are dropping,'" Chief Executive Robert Toll told analysts during a conference call.

There were some glimpses of improvement. The median price of existing single-family homes rose 3.2% to $280,000 in the Northeast in the first quarter, the NAR said. Mr. Toll reported a mixed bag in the Northeast, calling Putnam and Duchess counties in New York state and the state of Connecticut "B-plus" markets, while Massachusetts was a "D-minus" market.

Home prices fell 12.3% to $296,300 in the West and dropped 7.5% to $164,200 in the South. Yet Toll recently raised prices in a development in Naples, Fla., which had been one of the worst housing markets in the nation. "It gave us some happy times, especially considering that Naples was one of the worse markets," Mr. Toll said during the conference call.

Across most markets, however, Toll described the spring selling season as "quite weak," as buyers remained on the sidelines, despite improving housing affordability.

Toll's home-building revenue in the quarter ended April 30 fell 30% from the year-earlier period to $817.9 million. Net contracts for new homes fell 44% to 929 homes.

Analyst Ivy Zelman says even if Toll dropped its prices as much as other builders have, that might not generate many more sales in this high- end sector.

"Price is not the issue," Ms. Zelman said. "The problem is that many of Toll's buyers can't sell their existing homes. People are in a situation where they think 'I need to sell my house for $1 million and the best bid is $800,000.' They have negative equity, and they can't afford a down payment on a Toll Brother's home."

As home prices and sales decline, home builders have been writing down billions of dollars of land and inventory values on their books. Joel Rassman, the builder's chief financial officer, estimated second-quarter impairments would be in the range of $225 million to $375 million.

On the bright side, Toll reported about $1.2 billion in cash, which is expected to help the builder weather the downturn while credit tightens to buy land and pay for construction. Toll will release final second-quarter results June 3.

By: Michael Corkery
Wall Street Journal; May 14, 2008

Monday, April 28, 2008

Second-Home Buyers Go Condo

Vacation Houses Lose Out In a Weak Market; Coping With Pool Rules

The second-home market is in a slump. But one type of vacation property is still showing signs of life: condos (see Ballantyne Condos & Matthews Condos)

A new National Association of Realtors study estimates that sales of vacation homes in 2007 fell 31%, to 740,000, from 2006. But sales of condos dipped only slightly -- down 2.8% -- while sales of detached homes dropped 38%. The upshot is that condos cornered a substantially larger share of the vacation-home market last year: 29%, up from 21% in 2006.

Condos, including South Charlotte Condos, are selling better than single-family vacation houses for a number of reasons. They don't require their owners to maintain lawns, trim shrubs, paint the exteriors or replace roofs -- increasingly important concerns to an aging population. Condo communities also tend to offer amenities such as pools and clubhouses. And condos usually are cheaper to buy, and easier to resell, than houses.

Yet the prices of vacation condos haven't held up. Median prices fell almost 10% to $180,000 last year from the year before, while prices of single-family second homes remained flat, says the Realtor group. Part of that decline reflects the general downturn in the housing market, but the price pressure on condos also comes from investors who bought units in resort markets during the real-estate boom and now are trying to get rid of them. While the price-cutting is bad news for existing condo owners, it can make the units seem like relative bargains to buyers compared to houses.

Tod Phelps and his wife, Shelly, are among the second-home buyers attracted to condos. The couple since 2001 have owned a three-bedroom house on Beech Mountain, N.C., a 2½-hour drive from their primary home in Greensboro, N.C. But Mr. Phelps, an information-technology executive, says he is tired of spending weekends cleaning gutters and painting doors, and paying at least $3,000 a year to have people mow the lawn, weed flowerbeds and plow the drive in winter. "I didn't expect it to be as much trouble as it was," he says. Now the couple plan to sell the house and replace it with a "ski-in, ski-out" condo in the same community.

Condos are also making inroads in vacation spots where they've rarely been seen before, including beach villages along Lake Michigan. Some of these are attracting a new type of buyer used to an urban environment. Mary Morrissey, a government policy consultant in Chicago, and her husband recently bought a $350,000, two-bedroom loft at the Vineyards, a converted winery in Harbert, Mich. It features such downtown design elements as concrete fireplaces and window seats, exposed ductwork and soaring ceilings. The unit is much more open, light and fun than the usual cramped cottages found in the area, Ms. Morrissey says, and the contemporary style was the main reason they were attracted to it. "We never even thought about buying a single-family home," she says.

And in some places, such as Hawaii, prices have risen so high in recent years that condos are the only viable choice for many buyers. Maui broker Georgina Hunter says $1 million buys a two-bedroom condo in a resort with golf, pool and fitness center, but isn't enough for a single-family home. Since acquisition costs are so high, many buyers look to rent out their places when they're not vacationing there. Here condos also have the edge: Local zoning allows most condos to be rented for a short period, while most houses must be rented for at least 180 days. "You just get more bang for your buck," Ms. Hunter says.

But condos aren't popular in every second-home area. In New York's Hamptons, people prefer detached houses because they offer a yard, extra rooms and privacy -- "exactly what New Yorkers often lack in their primary residences," says Rick Hoffman, East End Regional vice president for the Corcoran Group brokers.

Condo living also can require an attitude adjustment as owners contend with close-by neighbors and live under a condo association's rules. Wayne Zawila, an Orlando, Fla., futures trader, paid $619,000 a little over a year ago for a three-bedroom weekend getaway in Daytona Beach, Fla. He thought the fourth-floor condo would be more secure and easier to manage than the Galena, Ill., lakefront house he used to own, which he once drove to at 3 a.m. because he was worried the pipes had frozen. But though condo life can be more carefree, at least when it comes to security and exterior maintenance, it's not rules-free. Mr. Zawila sometimes chafes under communal regulations he's never had to deal with before, like the one that bans him from smoking cigars while lounging in the pool. "It drives me nuts," he says.

Because many affluent second-home buyers like the common ownership and upkeep of exterior elements but still want a detached house, some builders are combining them in "condo homes." That setup attracted Sue Anne Davidson-Kalkus, a retired antiques dealer in Rome, Ga., and her husband, Tony, a retired Army colonel, who were married last year. A few months ago they listed her four-bedroom vacation retreat on 10 acres on Lookout Mountain, Ga., for $1 million and started searching for an easy-care vacation condo in the $600,000 range in New England, nearer to Mr. Kalkus's grown children. But after owning a custom-built place, Mrs. Davidson-Kalkus found the apartment-style condos she looked at to be "very ordinary." So the couple has just inked a deal to buy a detached, two-bedroom condo home at Winnapaug Cottages, a 35-acre development in Westerly, R.I. Their $300-a-month homeowner's fee covers landscaping, garbage collection, snow removal and exterior maintenance. "This is the best of both worlds," she says.

By: June Fletcher
April 18, 2008; WSJ

Monday, April 21, 2008

Beige Book: Regional economy not all bad

Regional economic activity was sluggish but showed signs of life in late February and March, according to the Federal Reserve's Beige Book anecdotal report of economic conditions.

The report is for the Fed's Fifth District, which is based in Richmond, Va., and includes the Carolinas.

It says that many sectors of the economy, including housing and retail, remained down in the past few weeks. But other sectors showed more of a mixed picture - notably manufacturing, which the Fed says has been helped by exports fueled by the decline of the U.S. dollar.

Manufacturing activity "firmed a bit in March," the Fed said, as producers shipped more goods overseas. On the other hand, U.S. demand for products slipped, and raw materials have become more expensive - a problem for manufacturers who are finding trouble passing along price increases to cash-strapped buyers.

Another tentative bright spot: finance. "Feedback from residential lenders was more encouraging in recent weeks," the Fed said, as mortgage originations were up in some areas and interest rates in Raleigh avoided a slump. Most of those loans were made to borrowers with good credit, the Fed said, as standards tightened. Commercial lending, for its part, was "lukewarm," and activity was below average in Virginia and the Carolinas.

Agriculture also saw a boost thanks to a recent spat of rain that helped North Carolina farmers plant crops including potatoes and cabbage. Service providers reported "moderate revenue growth," with contacts at engineering and telecom companies citing increased sales.

On the other hand, retail sales dwindled, the Fed said. A Washington, D.C., contact said that shoppers were "only spending when they had to," and big-ticket items such as furniture and vehicles took a severe hit. High fuel costs also drove up prices.

The housing market "remained generally sluggish," the Fed said, "though there were pockets of improvement." Prices and construction activity both slunk.

Commercial real estate, on the other hand, saw "somewhat positive reports from the Carolinas" despite weak conditions elsewhere. Leasing was steady in Raleigh and Charlotte, the Fed said, though new construction has slowed.

Richmond was one of three Fed districts where activity was "mixed or steady," the central bank said in its nationwide Beige Book report. The other nine districts reported a slowdown in economic activity.

The Fifth District serves the District of Coumbia, Maryland, Virginia, the Carolinas and most of West Virginia.

Triangle Business Journal; April 17, 2008

Triangle home sales drop 28% but prices remain steady

Sales of existing Triangle homes were down 28 percent and prices were flat in March, according to the Triangle Multiple Listing Association.

MLS says there were 2,217 existing homes sold in the Triangle during the month. That's down from 3,059 in March 2007 and represents the ninth straight month with a year-over-year decline.

Prices were more resilient, avoiding the drops seen in the majority of the country, though they advanced less than 1 percent during the month. The average sale price of an existing Triangle home was $235,175 in March, up from $233,763 a year prior. RTP is located in Raleigh North Carolina, other great services located in Raleigh are Raleigh Web Design, Web Design Raleigh, SEO Raleigh, Web Development Raleigh and Raleigh Web Development.

Strength in home prices has helped the Triangle avoid the worst of the national housing downturn, though price increases have slowed in recent months as sellers have found it harder to get top dollar for their homes. Prices were up 3 percent on a yearly basis in both January and February before flattening in March.

In another sign that some sellers are having a hard time finding the right price on their homes, the Triangle's home inventory continued to increase in March. MLS had 19,033 listings in March, up from 18,620 in February and 15,564 in March 2007. The figure represents an 8 1/2-month supply, ahead of the six-month supply that economists consider a healthy balance between supply and demand.

Triangle Business Journal; April 15, 2008

Thursday, April 17, 2008

Many Worry About Mortgage Payments

WASHINGTON(AP) -- One in seven mortgage holders worry they may soon fail to make their monthly payments and even more fret that their home's value is shrinking, according to a poll showing widespread stress from the nation's housing crisis.

In an ominous snapshot of how the sagging real estate market and sour economy are intersecting, the Associated Press-AOL Money & Finance poll also found that 60 percent said they definitely won't a buy a home in the next two years.

That was up from 53 percent who said so in an AP-AOL poll in September 2006. Only 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.

In today's economic climate, even holding onto what they already have is a challenge and source of distress for significant numbers of homeowners. Nearly three in 10 said they are concerned their home's value will decline over the next two years, while 14 percent of mortgage holders expressed worry that they might miss payments in the next six months.

One nervous homeowner is Daniel Gallego, a warehouse worker in Stockton, Calif., who said in a followup interview that he may have to sell his house at a big loss.

"We may have to move in with my wife's parents or my parents," said Gallego, 30, who has two young children. "I could pay off some debt, then we could rent, and maybe buy another house in a few years."

He said the rising cost of gasoline and other expenses have made his adjustable rate mortgage unaffordable. Because he doesn't expect his home's value to recover soon, he said he may be better off moving now before his rates rise.

One in 10 have adjustable rate mortgages, half the number who said so two years ago. These mortgages generally start at a low interest rate and are later adjusted to market conditions - which has often meant steep, unaffordable boosts that have forced many to refinance or even lose their homes.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling - good if you're buying a house but bad if you have to sell one.

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

"This is a great time to buy, but not necessarily to sell," said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can't because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

"We're just going to have to slap a Band-Aid on it and stay here until the market gets a little bit better," said Jackson, 30.

Underscoring the public's unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced - especially in the Northeast - while those saying housing is underpriced have doubled to one in 10. Midwesterners were likelier than those in other regions to feel this way.

Some areas of the country buck regional trends. Laurie Jensen, a single mother of three, struggles to make payments on her home in Whitehall, Mont., by working as a seasonal road construction flagger and at times collecting unemployment. She said she'd like to move outside of town, but the area is popular and prices have surged.

"Things are pretty crazy," she said. "Places I don't consider that great are really expensive."

The public anxiety is in reaction to an economy that is veering toward recession and losing jobs even as the housing market sputters badly. Foreclosures have soared to record highs, mortgage rates have increased, sales of existing and new homes have fallen and home values have dropped.

Gus Faucher, director of macroeconomics for Moody's Economy.com, a consulting firm, estimated that 9 million homeowners owe more on their home than its worth. He said his company believes home sales are at or near bottom and home values will continue to fall until early next year.

Even so, he said, many people bought their homes before the run-up in values that started around 2001 and remain in good shape.

"So the value of your house goes down temporarily," he said. Unless the homeowner must sell now or can't afford the payments, "that doesn't have that much of an impact."

The poll also found:
The biggest worriers are those expecting to buy soon. Of that group 43 percent frets that their home's value will drop in the next two years, compared with 25 percent of those not expecting to buy soon.

Fifty-nine percent think now is a good time to buy.

Half think this is a very tough time for first-time buyers, an increase from two years ago. Nearly two-thirds think it's harder for first-home buyers than it was five years ago.

The AP-AOL Money & Finance poll was conducted from March 24-April 3 by Abt SRBI Inc. It involved telephone interviews with 1,002 adults nationwide, for whom the margin of sampling error is plus or minus 3.1 percentage points.

Included were interviews with 769 homeowners, for whom the sampling margin of error is plus or minus 3.5 points. The margin of sampling error for other subgroups was larger.

Wednesday, April 2, 2008

Latest Trouble Spot for Banks: Souring Home-Equity Loans

Losses May Hit Lenders That Skirted Subprime; Surprise Delinquents

Here comes another headache for banks suffering from the mortgage downturn: Losses on home-equity loans are soaring, even at some lenders that avoided big blunders on subprime loans.

When times were good, banks raked in billions of dollars in profit from home-equity loans, which allow borrowers to tap the accumulated value in their property with either a loan for a specific amount or a line of credit. As long as home prices were rising, lenders had little to worry about.

But falling home values are leaving banks with little or nothing to collect on many home-equity loans in case of default. Some stretched borrowers are keeping up with their mortgage and credit cards -- but not their home-equity loan.

The problems are already causing trouble for J.P. Morgan Chase & Co. and Wells Fargo & Co., and are expected to hit other large banks when first-quarter earnings results are released next month. The pain is likely to deepen through the rest of 2008, sapping capital levels and resulting in tighter lending standards as banks try to reduce their risk.

"These losses are well beyond what we would have modeled...and continue to get worse," said Charles Scharf, head of J.P. Morgan's retail business.

At a meeting with analysts and investors last month, Mr. Scharf spent more than 30 minutes dissecting the second-largest U.S. bank's $95 billion home-equity portfolio. It wasn't pretty. J.P. Morgan expects home-equity-related losses of about $450 million in the first quarter, up from $248 million in last year's fourth quarter. By the end of 2008, home-equity losses could double from current levels, he said.

Because J.P. Morgan largely escaped the brunt of the subprime crisis, its ominous tone on home-equity loans has fueled anxious number-crunching.
David Hilder, a banking analyst at Bear Stearns, last week cut his 2008 and 2009 earnings estimates for National City Corp., SunTrust Banks Inc., Washington Mutual Inc. and Wells Fargo, citing rising home-equity losses. Each of those lenders has 12% to 19% of its total assets tied up in home-equity loans.

Fitch Ratings, a unit of Fimalac SA of Paris, predicts that "banks will significantly ratchet up loan-loss provisions against home-equity loans in 2008."

Projected losses from home-equity loans aren't anywhere close in size to the carnage caused by the declining value of mortgage-related securities. (Those losses now total more than $150 billion.) But the cascading delinquencies and charge-offs represent one more piece of the U.S. banking industry that is in big trouble after years of bumper-crop profits.

Originally used to finance home-improvement projects, borrowers increasingly turned to home-equity loans to pay off other debts, such as credit cards. Home-equity loans also became a popular way to fund vacations and expensive electronics -- or to buy a house with little or no money down without paying for private mortgage insurance.

Now, the steep decline in housing prices and weak economy are turning the home-equity business upside down. About 4.65% of fixed-rate home-equity loans were delinquent in the fourth quarter of 2007, up from 3.11% a year earlier, according to Equifax Inc. and Moody's Economy.com.

"We will continue to see banks increasing reserves for their home-equity portfolios and tightening their home-equity policies, changing their credit standards in response to price declines," said Doug Duncan, chief economist of the Mortgage Bankers Association.

While banks can foreclose on a first-lien mortgage, lenders often have little recourse when trying to collect a delinquent home-equity loan, especially if another bank holds the primary mortgage. Banks holding home-equity loans generally can only seize the collateral -- a house -- after the mortgage is paid off.

When another bank holds the mortgage and the mortgage payments are current, the home-equity lender is effectively powerless to collect the debt.

Unfortunately for home-equity lenders, many borrowers understand that pecking order, concluding there are few repercussions if they stop making payments on their home-equity loan. "Lenders are seeing people go delinquent on home equity who by all rights wouldn't be expected to go delinquent," said Dan Balkin of Wholesale Access, a Maryland research and consulting firm that specializes in the mortgage industry.

Other types of consumer loans also are souring, including credit cards and auto loans. But delinquent home-equity loans are rising faster, representing 12.5% of all delinquent loans in the fourth quarter at Bank of America Corp., the largest U.S. bank in stock-market value. That was up from 9.4% in last year's first quarter, according to research firm SNL Financial.

Leaning on outside mortgage brokers for home-equity business was "one of the biggest mistakes we've made," said Mr. Scharf. Those loans have performed worse than home-equity loans generated by J.P. Morgan.

J.P. Morgan, Wells Fargo and other banks are now backing away from brokers to focus on home-equity loans offered through their own retail branches, where customers already have a relationship with the bank. Citigroup Inc. has slashed the number of home-equity loans originated through brokers by 90%.

Meanwhile, financial institutions are refusing to provide home-equity loans to homeowners whose residences are already weighed down by big mortgages in states like California and Florida where home values are falling fast.

"This product was meant to help people do construction on their house, [and] do debt consolidation -- not to take out every last dollar of equity in their home to finance a different kind of lifestyle," Mr. Scharf said. J.P. Morgan is "rolling our changes back to represent that kind of product."

By: Robin Sidel; Ruth Simon contributed to this article.
Wall Street Journal; March 12, 2008

Tuesday, March 25, 2008

Housing Prices Fall Nationwide Yet Rise in Raleigh; Durham Cary Apex and Chapel Hill Markets.

NEW YORK - Home prices in many cities continued to plunge by record levels in January as sellers cut their asking bids and rising foreclosures took their toll, new data showed Tuesday.

While the spring selling season usually gives the market a bounce, some analysts say any notable improvement may not come until well into the summer. U.S. home prices fell 10.7 percent in January, and the Standard & Poor's/Case-Shiller home price index of 20 cities saw the steepest decline in the index's two-decade history.

Worst-hit were Las Vegas and Miami, both reporting 19.3 percent drops, as the regions are still paying the price for rampant speculation and overbuilding during the boom years. Those cities and 14 others, including Phoenix, San Diego, and Detroit, posted record lows.

"I wouldn't be looking for a pattern of improvement until April, May or June," said Brian Bethune, Global Insight's chief U.S. economist.

Only Charlotte, N.C., squeaked by as a gainer in the Case-Shiller index, with a 1.8 percent rise in January compared to a year earlier.

"We are still selling here in Charlotte," said Dianne McKnight, a broker associate at Re/Max Executive Realty in the city. "If a property is priced right, it sells in a day and you have multiple offers. There are plenty of buyers out there kicking around."

But the overall downbeat figures come on the heels of data released Monday showing that the median price of existing homes being sold in February fell in the largest year-over-year drop since at least 1999.

"Home prices continue to fall, decelerate and reach record lows across the nation," said David Blitzer, index committee chairman at S&P. "No markets seem to be completely immune from the housing crisis."

Blitzer said all 20 cities S&P tracks have seen falling prices for five consecutive months when compared to the prior month. What's more, the declines are growing in severity, with 13 of the 20 cities reporting their biggest single monthly decline in January.

Pava Leyrer, president of Heritage National Mortgage in Detroit, said the tightening of loan standards has compounded the problems of too much inventory, foreclosures and worries over the economy.

"It's just a spiral that will end up taking this year to get out of," Leyrer said.

She said it would take until the spring of 2009 before they started to see the market in Michigan improve.

While the vast majority of homes in the U.S. are not in danger of foreclosure, the housing slump has raised concerns about a recession and has had ripple effects across the economy as consumers spend less in other areas and banks tighten lending requirements. Prices that wont rise in raleigh are the price of Raleigh Web Design, Web Design Raleigh, SEO Raleigh, Web Development Raleigh and Raleigh Web Development.

Consumer confidence sank to a five-year low in March as tight credit markets, rising prices and worsening job prospects deepened worries that the economy has fallen into recession. The Fed has aggressively slashed interest rates to spur growth and free up the credit markets.

A narrower survey, released separately Tuesday by the Federal Housing Enterprise Oversight said home prices fell 3 percent in January from the same month last year, and dipped 1.1 percent from December. The declines were sharpest in New England.

The monthly OFHEO index is down 4.1 percent since its peak last April. The index is calculated using mortgages of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae or Freddie Mac. Legislation enacted in February temporarily raised the limit to as much as $729,750 in high-cost areas.

Many sellers in some parts of the country seem to be cutting prices more aggressively. While sales of existing homes notched a surprise increase in February after falling for six straight months, the median price fell, according to data Monday from the National Association of Realtors.

The trade group said sales rose 2.9 percent last month to a seasonally adjusted annual rate of 5.03 million units - the biggest increase in a year. But the median existing sales price in February fell to $195,900, the largest year-over-year drop on records that go back to 1999.

By VINNEE TONG, AP Business Writer
The News & Observer; March 25