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Buying versus Renting
There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.
Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.
Savings: Buying
In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.
Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.
• The renter starts out paying $800 per month with annual increases of 5%
• The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
• After 6 years, the homeowner's payment is lower than the renter's monthly payment
• With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years
Years Rent Payment Mortgage Payment Monthly Difference After Tax Savings Yearly Difference After Tax Savings
1 800 1000 -200 -50 -2400 -600
2 840 1000 -160 -10 -1920 -120
3 882 1000 -118 +32 -1416 +384
4 926 1000 -74 +76 -888 +912
5 972 1000 -28 +122 -336 +1464
6 1021 1000 +21 +171 +252 +2052
7 1072 1000 +72 +222 +864 +2664
8-30 Savings increase every year
Monthly Expenses: Buying
Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:
• Property Taxes and Special Assessments
• Home/Hazard Insurance
• Utilities
• Maintenance
• Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
• Membership Fee: It may pay for recreational facilities and other
Tuesday, December 2, 2008
Friday, November 28, 2008
Florida real estate gains a new appeal
Buyers from eastern Europe are looking for bargains
Urman, 39, is a residential developer who has been riding a wave of post-communist capitalism that has infused huge sums of money into former Soviet states. Those clever enough to take advantage of the burgeoning free-market economies have made a killing.
He and his colleagues say they are now poised to invest a significant portion of that wealth in Southwest Florida's ailing real estate market.
"Me and my business partners think the real estate market is down in its cycle," Urman said by telephone recently from the Czech Republic. "We would like to take advantage of the down market and buy a residential building. We are looking not only for the rental income, but an appreciation in value in the next three years."
Urman's investment group is being assisted by Sarasota attorneys Alan Tannenbaum, who has specialized in real estate for three decades, and Ivo Travnicek, a lawyer in Tannenbaum's firm. Travnicek hails from a city outside Prague and is fluent in English and five eastern European languages.
With Ian Black, a commercial Realtor who has spent his career selling real estate first in Ireland and now in Southwest Florida, as a consultant, Tannenbaum has formed Florida Venture Partners to smooth over the myriad complications foreign buyers face when purchasing Florida property.
Southwest Florida could use the inflow from Eastern Europe like it could at no other time in recent history. There are more than three times the number of homes for sale than is normal. An already rampant foreclosure rate spiked again in September to a record. With the economy and stock market in dis even at today's depressed prices.
Foreign buyers like Urman and his partners have the potential to be game changers.
After four trips overseas to generate interest in Florida real estate from investors from Slovakia to Hungary to Russia, Florida Venture Partners is now bringing over the investors themselves -- an elite group whom Tannenbaum claims are poised to sink potentially billions of dollars into the Sunshine State.
"They have a lot of capital and staying power and they are not looking to turn a profit next year," said Tannenbaum, well-known in this region for his representation of loan holders from Bradenton's former Coast Bank. "We'll have the channel open so the rest of them will see us as the portal to investment over here. Florida as it exists now will be bought by the world."
Vulture funds
Florida far outpaced all other states in attracting foreign investment, with roughly 25 percent of all purchases made by international buyers done in the Sunshine State, according to a recent National Association of Realtors study.
Often grouped under the unsavory-sounding term "vulture funds," opportunistic investment groups like those being courted by Florida Venture Partners already are being pursued by others in the state.
Some are units of existing regional real estate firms, such as Prudential Palms Realty, Michael Saunders & Co. and Coldwell Banker Residential Real Estate.
Others, like Tannenbaum's group, have formed in the last few years with a laser focus on a specific type of investor seeking to profit from real estate prices that -- at least in terms of residential prices -- today equate with the pre-boom year of 2003.
While the investors may differ in where they are from, or in what segment of the real estate market they are interested in, they all share a common thread: pay as little as possible now; sell for much, much more later.
A Bal Harbour-based company does little to hide its scavenger-like mission. It is in their name: Condo Vultures Realty.
"Our best guesstimate is that 95 percent of the people who hear the term are disgusted," owner Peter Zalewski said. "But the five percent of the people who hear the term and know what it means are the people who have the money today. Everything we do is legal and ethical."
Since incorporating in the post-boom year of 2006, Zalewski said the business of selling off the bloated Miami-Dade County condominium inventory has been brisk.
"We have been rocking and rolling ever since," Zalewski said.
His company has grown to 29 agents in Southwest Florida and they are expanding into other deflated markets such as Las Vegas and San Diego.
There has been interest from more than 200 funds, including hedge funds and university endowments. About 70 percent of that interest has been from domestic sources and 30 percent from overseas, including locales such as Singapore, Canada, France and Germany.
"If you're a savvy buyer and you are trying to find product in the hot-button market at a bargain price, here we are," Zalewski said.
'A broad range of projects'
Warren Buffett, the legendary investor whom Forbes still ranks as the world's richest man despite a deflated stock market, has predicted that in 10 years the net ownership of U.S. assets by foreigners will amount to $11 trillion.
Tannenbaum also believes that is a possibility. He said a typical investor working with his firm might be a Czech who, flush with oil, mineral or development company money, could buy a $2.6 million Siesta Key home, 50 condo units with golf course privileges for friends and business partners and a commercial building to establish a U.S. base for his company.
Some of Tannenbaum's clients may, in fact, fit into the opportunistic world of "vultures," but others will actually help out the market by providing the cash to complete a half-built subdivision or commercial complex stalled by the credit crunch.
"It's a broad range of projects," he said. "Nobody has yet to come in and buy the huge inventory of overbuilt condo, homes and half-built subdivisions."
While some of the more traditional realty firms may work merely to entice a foreign buyer to Southwest Florida, Tannenbaum and Travnicek plan to offer year-round concierge services.
Tickets to the ballet, a day at the spa for relatives, a round of golf at the Ritz-Carlton Members Club or transportation to box seats at a Tampa Bay Buccaneers game are examples of what Florida Ventures Partners might choose to arrange when the investors are in town.
Yard service, house cleaning, maintenance and rental oversight would be some of the services the company would provide when the owners are away.
"There is hundreds of billions of dollars of Florida property that needs to move, and I believe much of it will be bought up in the next few years," Tannenbaum said. "They have the money to invest and we are going to get them to invest it in Florida."
Urman, the Prague developer, equates the $5 million to seed money: "Me and my partners are ready to make new investments if we are satisfied with the results of the pilot project."
Taking advantage
Jack McCabe, a Deerfield Beach-based real estate consultant, said Florida Venture Partners seems like the right idea at the right time.
"It's a smart strategy and they are reaching to where the buyers are now," McCabe said. "They were communists 20 years ago and since they have become a capitalist market, some of them have made tremendous fortunes."
McCabe, who pointed to a handful of similar ventures in South Florida, said the eastern European investors may do a good deed or two along they way -- such as helping that struggling builder finish his subdivision -- but make no mistake: They are opportunistic buyers.
"They didn't make these fortunes by making stupid decisions," he said. "They're looking at taking advantage of buying Florida properties at 30 or 40 cents on the dollar."
Part of the reason these buyers want to travel halfway around the world to invest in a second, third or even fourth home is the same thing that has drawn many others: Florida's climate.
But another draw is the very fact that the properties would be so far away from home, Travnicek said.
"They are big fish in a small pond there, but here they can go to Whole Foods and go golfing and nobody knows them," he said. "The Russian investment alone is going to be huge. They like America and they are coming."
Urman, 39, is a residential developer who has been riding a wave of post-communist capitalism that has infused huge sums of money into former Soviet states. Those clever enough to take advantage of the burgeoning free-market economies have made a killing.
He and his colleagues say they are now poised to invest a significant portion of that wealth in Southwest Florida's ailing real estate market.
"Me and my business partners think the real estate market is down in its cycle," Urman said by telephone recently from the Czech Republic. "We would like to take advantage of the down market and buy a residential building. We are looking not only for the rental income, but an appreciation in value in the next three years."
Urman's investment group is being assisted by Sarasota attorneys Alan Tannenbaum, who has specialized in real estate for three decades, and Ivo Travnicek, a lawyer in Tannenbaum's firm. Travnicek hails from a city outside Prague and is fluent in English and five eastern European languages.
With Ian Black, a commercial Realtor who has spent his career selling real estate first in Ireland and now in Southwest Florida, as a consultant, Tannenbaum has formed Florida Venture Partners to smooth over the myriad complications foreign buyers face when purchasing Florida property.
Southwest Florida could use the inflow from Eastern Europe like it could at no other time in recent history. There are more than three times the number of homes for sale than is normal. An already rampant foreclosure rate spiked again in September to a record. With the economy and stock market in dis even at today's depressed prices.
Foreign buyers like Urman and his partners have the potential to be game changers.
After four trips overseas to generate interest in Florida real estate from investors from Slovakia to Hungary to Russia, Florida Venture Partners is now bringing over the investors themselves -- an elite group whom Tannenbaum claims are poised to sink potentially billions of dollars into the Sunshine State.
"They have a lot of capital and staying power and they are not looking to turn a profit next year," said Tannenbaum, well-known in this region for his representation of loan holders from Bradenton's former Coast Bank. "We'll have the channel open so the rest of them will see us as the portal to investment over here. Florida as it exists now will be bought by the world."
Vulture funds
Florida far outpaced all other states in attracting foreign investment, with roughly 25 percent of all purchases made by international buyers done in the Sunshine State, according to a recent National Association of Realtors study.
Often grouped under the unsavory-sounding term "vulture funds," opportunistic investment groups like those being courted by Florida Venture Partners already are being pursued by others in the state.
Some are units of existing regional real estate firms, such as Prudential Palms Realty, Michael Saunders & Co. and Coldwell Banker Residential Real Estate.
Others, like Tannenbaum's group, have formed in the last few years with a laser focus on a specific type of investor seeking to profit from real estate prices that -- at least in terms of residential prices -- today equate with the pre-boom year of 2003.
While the investors may differ in where they are from, or in what segment of the real estate market they are interested in, they all share a common thread: pay as little as possible now; sell for much, much more later.
A Bal Harbour-based company does little to hide its scavenger-like mission. It is in their name: Condo Vultures Realty.
"Our best guesstimate is that 95 percent of the people who hear the term are disgusted," owner Peter Zalewski said. "But the five percent of the people who hear the term and know what it means are the people who have the money today. Everything we do is legal and ethical."
Since incorporating in the post-boom year of 2006, Zalewski said the business of selling off the bloated Miami-Dade County condominium inventory has been brisk.
"We have been rocking and rolling ever since," Zalewski said.
His company has grown to 29 agents in Southwest Florida and they are expanding into other deflated markets such as Las Vegas and San Diego.
There has been interest from more than 200 funds, including hedge funds and university endowments. About 70 percent of that interest has been from domestic sources and 30 percent from overseas, including locales such as Singapore, Canada, France and Germany.
"If you're a savvy buyer and you are trying to find product in the hot-button market at a bargain price, here we are," Zalewski said.
'A broad range of projects'
Warren Buffett, the legendary investor whom Forbes still ranks as the world's richest man despite a deflated stock market, has predicted that in 10 years the net ownership of U.S. assets by foreigners will amount to $11 trillion.
Tannenbaum also believes that is a possibility. He said a typical investor working with his firm might be a Czech who, flush with oil, mineral or development company money, could buy a $2.6 million Siesta Key home, 50 condo units with golf course privileges for friends and business partners and a commercial building to establish a U.S. base for his company.
Some of Tannenbaum's clients may, in fact, fit into the opportunistic world of "vultures," but others will actually help out the market by providing the cash to complete a half-built subdivision or commercial complex stalled by the credit crunch.
"It's a broad range of projects," he said. "Nobody has yet to come in and buy the huge inventory of overbuilt condo, homes and half-built subdivisions."
While some of the more traditional realty firms may work merely to entice a foreign buyer to Southwest Florida, Tannenbaum and Travnicek plan to offer year-round concierge services.
Tickets to the ballet, a day at the spa for relatives, a round of golf at the Ritz-Carlton Members Club or transportation to box seats at a Tampa Bay Buccaneers game are examples of what Florida Ventures Partners might choose to arrange when the investors are in town.
Yard service, house cleaning, maintenance and rental oversight would be some of the services the company would provide when the owners are away.
"There is hundreds of billions of dollars of Florida property that needs to move, and I believe much of it will be bought up in the next few years," Tannenbaum said. "They have the money to invest and we are going to get them to invest it in Florida."
Urman, the Prague developer, equates the $5 million to seed money: "Me and my partners are ready to make new investments if we are satisfied with the results of the pilot project."
Taking advantage
Jack McCabe, a Deerfield Beach-based real estate consultant, said Florida Venture Partners seems like the right idea at the right time.
"It's a smart strategy and they are reaching to where the buyers are now," McCabe said. "They were communists 20 years ago and since they have become a capitalist market, some of them have made tremendous fortunes."
McCabe, who pointed to a handful of similar ventures in South Florida, said the eastern European investors may do a good deed or two along they way -- such as helping that struggling builder finish his subdivision -- but make no mistake: They are opportunistic buyers.
"They didn't make these fortunes by making stupid decisions," he said. "They're looking at taking advantage of buying Florida properties at 30 or 40 cents on the dollar."
Part of the reason these buyers want to travel halfway around the world to invest in a second, third or even fourth home is the same thing that has drawn many others: Florida's climate.
But another draw is the very fact that the properties would be so far away from home, Travnicek said.
"They are big fish in a small pond there, but here they can go to Whole Foods and go golfing and nobody knows them," he said. "The Russian investment alone is going to be huge. They like America and they are coming."
Closings better than expected for new Miami high-rise condos
The number of closings at new downtown Miami condos has been better than many expected, a survey showed, but a big test still looms for the revitalizing urban center.
Miami's latest building boom is creating 22,000 condominium units in the city's urban core, more than double the number built in the last 40 years. But a long-standing question remains: How long will it take for all the condos to actually sell?
The answer: 70 percent have found a buyer, according to a new study by condovultures.com, a real estate consultancy. So far, 17,299 condos have been delivered with 12,169 closed at an average price of $405,966 per unit, according to the condovultures.com report. It amounts to a sales total of nearly $5 billion.
By year's end, 3,999 units are set to hit the market. Another 1,439 after that.
The sales have been better than many observers expected for a downtown area held out by some as ground zero for speculation and excess. And it underlines Miami's ongoing urban revitalization, fueled by people, builders and investors returning to the city center.
But it also comes with a big caveat: Nearly a quarter of new downtown condos produced by the boom are just being delivered and starting closings now, including many of the largest projects.
''South Florida developers have to be excited by the fact that more than two out of three downtown condo units have closed successfully,'' said Peter Zalewski, principal at condovultures.com in Bal Harbour. ``But the giants are coming.''
The massive projects include the three-tower, 1,800-unit Icon Brickell pinched between Biscayne Bay and Brickell Avenue, which starts closings this month. The 342-unit Epic, rising along the Miami River, is poised to start closings. So too, 530-unit Mint at Riverfront, 459-unit Infinity at Brickell and 346-unit Paramount Bay.
''We are bullish,'' said Miroslav Mladenovic, vice president of Cabi Development, which started closings Thursday on its 848-unit Everglades on the Bay project along Biscayne Boulevard. ``Comparable projects to ours have fared well, we don't see why we can't fare the same.''
The new batch of condos are hitting the market as credit remains tight, consumers are increasingly cash-strapped and existing home prices continue to fall due to an outsized inventory of unsold homes throughout South Florida. Sales, however, have picked up in recent months.
Zalewski's report, culled from a review of property records ending Sept. 30, covers the greater downtown area between the Julia Tuttle and Rickenbacker causeways and Interstate 95 to Biscayne Bay.
The swath of land -- which includes the Brickell, central business district and Midtown neighborhoods -- has seen more development than any corner in Florida. The area is closely watched due to its significant construction and its implications for the broader housing market, but also because policy makers and many builders view redevelopment in the urban core as a key element to the region's overall economic success.
Meanwhile, the overall downtown closings have been solid so far, Zalewski said.
''We're like in the sixth or seventh inning of this,'' said the Bal Harbour analyst. ``We had a good starting pitcher, and some decent middle relievers, now the question is if it's going to be a blown save.''
BY MATTHEW HAGGMAN
Miami's latest building boom is creating 22,000 condominium units in the city's urban core, more than double the number built in the last 40 years. But a long-standing question remains: How long will it take for all the condos to actually sell?
The answer: 70 percent have found a buyer, according to a new study by condovultures.com, a real estate consultancy. So far, 17,299 condos have been delivered with 12,169 closed at an average price of $405,966 per unit, according to the condovultures.com report. It amounts to a sales total of nearly $5 billion.
By year's end, 3,999 units are set to hit the market. Another 1,439 after that.
The sales have been better than many observers expected for a downtown area held out by some as ground zero for speculation and excess. And it underlines Miami's ongoing urban revitalization, fueled by people, builders and investors returning to the city center.
But it also comes with a big caveat: Nearly a quarter of new downtown condos produced by the boom are just being delivered and starting closings now, including many of the largest projects.
''South Florida developers have to be excited by the fact that more than two out of three downtown condo units have closed successfully,'' said Peter Zalewski, principal at condovultures.com in Bal Harbour. ``But the giants are coming.''
The massive projects include the three-tower, 1,800-unit Icon Brickell pinched between Biscayne Bay and Brickell Avenue, which starts closings this month. The 342-unit Epic, rising along the Miami River, is poised to start closings. So too, 530-unit Mint at Riverfront, 459-unit Infinity at Brickell and 346-unit Paramount Bay.
''We are bullish,'' said Miroslav Mladenovic, vice president of Cabi Development, which started closings Thursday on its 848-unit Everglades on the Bay project along Biscayne Boulevard. ``Comparable projects to ours have fared well, we don't see why we can't fare the same.''
The new batch of condos are hitting the market as credit remains tight, consumers are increasingly cash-strapped and existing home prices continue to fall due to an outsized inventory of unsold homes throughout South Florida. Sales, however, have picked up in recent months.
Zalewski's report, culled from a review of property records ending Sept. 30, covers the greater downtown area between the Julia Tuttle and Rickenbacker causeways and Interstate 95 to Biscayne Bay.
The swath of land -- which includes the Brickell, central business district and Midtown neighborhoods -- has seen more development than any corner in Florida. The area is closely watched due to its significant construction and its implications for the broader housing market, but also because policy makers and many builders view redevelopment in the urban core as a key element to the region's overall economic success.
Meanwhile, the overall downtown closings have been solid so far, Zalewski said.
''We're like in the sixth or seventh inning of this,'' said the Bal Harbour analyst. ``We had a good starting pitcher, and some decent middle relievers, now the question is if it's going to be a blown save.''
BY MATTHEW HAGGMAN
Tuesday, November 11, 2008
5 Real Estate Markets Most Likely to Rebound
Seattle tops the list of best places to invest in commercial property
If you're a homeowner seeing property values plummet, look to the commercial real estate market for solace. It might tell you which areas will recover fastest — and which will likely remain weak.
The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes, pushing prices up.
The best cities in which to invest are those that are considered gateways to international investment, have vital downtowns where people can forgo cars, and don't have a glut of condos or office space.
These traits landed Seattle the No. 1 spot on the list. No city scored above a 6.15 on a scale of one to nine (one being an abysmal place to invest and nine being excellent).
Seattle is "a diversified market, has a good base of business and is becoming a 24-hour city," says Stephen Blank, senior resident fellow, finance, of the Urban Land Institute. "It's going to be in a good position to come back."
Although the city is suffering from the loss of Washington Mutual and the downsizing of Starbucks, Boeing and Microsoft are still relatively strong. Apartment vacancies are low and there aren't too many new buildings going up, meaning the market won't be oversupplied. The same is true in the retail space.
San Francisco comes in second with a 6.12. The City by the Bay learned from the tech crash of 2001 not to overbuild. There is a reasonable supply of office and apartment space, which should limit vacancies. San Francisco's port is also expected to help the city during the downturn as Americans continue to rely on Asian imports.
Washington, D.C., New York and Los Angeles round out the top five.
Of course, there's no guarantee that an improved commercial market will lead to an improved home market. However, investors have a better chance of seeing home prices rise in fundamentally strong markets like Seattle than in struggling cities like Detroit.
It landed at the bottom of the list, scoring a 2.24. Detroit has been reliant on the car industry, which is rapidly shrinking. Other businesses are unlikely to fill the void in the next few years, which means the city will be hit hard by further economic struggles.
New Orleans also lands near the bottom with a score of 3.33. The city has been losing businesses to Houston, Dallas and Atlanta since Hurricane Katrina hit in 2005.
The other cities at the bottom of the list — Columbus, Ohio, Milwaukee, Wis., and Cleveland — suffer from dying industries and lack of tourist appeal.
Recent attempts to turn downtown Milwaukee into a thriving 24-hour city haven't been enough to protect it from the coming downturn. Increasingly picky investors are expected to favor higher-quality port cities over Midwest towns.
And while Columbus has the potential to become a major shipping hub for goods traveling cross-country, that revitalization may have to wait for a stronger economy and a government focused on improving the nation's roads.
For now, prospects are dim.
By Dorothy Pomerantz, Forbes
Visit the Real Estate Open Networkers
If you're a homeowner seeing property values plummet, look to the commercial real estate market for solace. It might tell you which areas will recover fastest — and which will likely remain weak.
The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes, pushing prices up.
The best cities in which to invest are those that are considered gateways to international investment, have vital downtowns where people can forgo cars, and don't have a glut of condos or office space.
These traits landed Seattle the No. 1 spot on the list. No city scored above a 6.15 on a scale of one to nine (one being an abysmal place to invest and nine being excellent).
Seattle is "a diversified market, has a good base of business and is becoming a 24-hour city," says Stephen Blank, senior resident fellow, finance, of the Urban Land Institute. "It's going to be in a good position to come back."
Although the city is suffering from the loss of Washington Mutual and the downsizing of Starbucks, Boeing and Microsoft are still relatively strong. Apartment vacancies are low and there aren't too many new buildings going up, meaning the market won't be oversupplied. The same is true in the retail space.
San Francisco comes in second with a 6.12. The City by the Bay learned from the tech crash of 2001 not to overbuild. There is a reasonable supply of office and apartment space, which should limit vacancies. San Francisco's port is also expected to help the city during the downturn as Americans continue to rely on Asian imports.
Washington, D.C., New York and Los Angeles round out the top five.
Of course, there's no guarantee that an improved commercial market will lead to an improved home market. However, investors have a better chance of seeing home prices rise in fundamentally strong markets like Seattle than in struggling cities like Detroit.
It landed at the bottom of the list, scoring a 2.24. Detroit has been reliant on the car industry, which is rapidly shrinking. Other businesses are unlikely to fill the void in the next few years, which means the city will be hit hard by further economic struggles.
New Orleans also lands near the bottom with a score of 3.33. The city has been losing businesses to Houston, Dallas and Atlanta since Hurricane Katrina hit in 2005.
The other cities at the bottom of the list — Columbus, Ohio, Milwaukee, Wis., and Cleveland — suffer from dying industries and lack of tourist appeal.
Recent attempts to turn downtown Milwaukee into a thriving 24-hour city haven't been enough to protect it from the coming downturn. Increasingly picky investors are expected to favor higher-quality port cities over Midwest towns.
And while Columbus has the potential to become a major shipping hub for goods traveling cross-country, that revitalization may have to wait for a stronger economy and a government focused on improving the nation's roads.
For now, prospects are dim.
By Dorothy Pomerantz, Forbes
Visit the Real Estate Open Networkers
Sunday, October 5, 2008
For bailout to work, housing market needs to mend
Washington's financial bailout plan is now law. So the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right?
Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.
"Housing traditionally does lead the economy through a recovery. I think it's going to be critical for a sustained recovery in this cycle, too," said Gary Thayer, senior economist at Wachovia Securities.
In the meantime, people like Alicia Elliott are adjusting to a new American reality: Life without credit.
The 21-year old Morgantown, W. Va., resident just bought a used mobile home, borrowing $4,000 from friends and family because she couldn't get a bank loan.
"I tried to. Couldn't do it. It's just hard to get a loan," said Elliott, who works as a cashier at a Lowe's Cos. store.
She used to get bombarded with offers for credit cards. Now she can't even get one. "I get denied one after another after another. It doesn't matter if you have a co-signer or not," she said.
Trey Simmons, a 31-year-old barber at a Dallas hair salon, said he worries tighter lending standard will squash his goal of buying a home next year.
"Credit is a privilege everybody can't get," Simmons said. "I had credit at a young age and messed up."
He now operates on a strictly cash basis. "If I don't have it," he said, referring to cash, "I don't spend it."
The dilemma boils down to a matter of trust.
"Credit, by definition, means trust and faith, and for many reasons trust and faith have been damaged," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
Sohn said the near certainty of a recession makes it too risky for the thousands of small and medium-sized banks across the country to lend to people like Elliot.
"Banks know the economy is getting worse, so ... they will keep being cautious," said Sohn, a former banking executive.
Still, the government hopes that by scooping up billions of dollars in bad mortgage debt and other toxic assets, banks eventually can clean up their shaky balance sheets, crack open the vaults and send money washing through the system again.
The rescue plan also raises the federally insured deposit limit from $100,000 to $250,000, a move that could boost banks' reserves and further grease the lending wheels.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and a key negotiator over the past weeks, said the measure was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort comparable to the New Deal.
In the meantime, the Treasury Department is moving swiftly to get the plan started. Treasury Secretary Henry Paulson said Friday he did not wait for final approval of the measure to begin preparation. He has been lining up outside advisers as his staff works out details on a multitude of complex issues.
But several hurdles could trip up the plan. For starters, even when the Treasury starts buying bad assets, some banks may hoard the cash they receive in return until they see how the plan pans out. That has the potential to make the lending logjam worse, said Vincent R. Reinhart, former director of the Federal Reserve's monetary affairs division.
"They may sit on the sidelines and wait to see (the bailout) get some traction. The problem is if everybody sits on the sidelines, nobody gets in the game. It's a risk," he said.
It also creates a vicious cycle: No trust means no lending; tight credit means it's harder to buy a home; the more difficult it is to buy or sell a home, the further home prices will fall; and the further prices drop, the more foreclosures there will be.
U.S. home prices — down 20 percent from their peak in July 2006 — still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away.
But Jim Gillespie, chief executive of Coldwell Banker Real Estate, said he hopes that lower prices, combined with the government's actions will jump-start stagnant demand. The federal bailout plan, he said, "will give people reassurance that mortgage money is available."
Jobs are another big concern. The stranglehold on credit has choked companies big and small that depend on regular inflows of borrowed money to pay employees and stay afloat.
The Labor Department said Friday that employers cut 159,000 jobs in September, the fastest pace of losses in more than five years. Experts say that number will grow as the effects of the credit gridlock course through the economy in coming days and weeks.
The nation's unemployment rate is now 6.1 percent, up from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.
The unemployment rate could rise to as high as 7.5 percent by late 2009, economists predict. If that happens, it would mark the highest since after the 1990-91 recession.
Boosting employment is critical to kick-starting lending because "if jobs are growing, then incomes are a growing, and if incomes are growing then people are consuming," Reinhart said.
Consumers and businesses have retrenched so much that some analysts fear the economy stalled or shrank in the third quarter that ended last week. The Labor Department report Friday showed wage growth for workers is slowing, meaning they'll be more hard-pressed to spend, especially for something as expensive as a home.
Many economists predict the economy will contract in the final quarter of 2008 and the first quarter of next year. That would meet the classic definition of a recession — two consecutive quarters of a shrinking economy.
One bright spot: optimism hasn't been totally squashed yet.
Morgan Cavanaugh, proprietor of Moriarty's Pub in downtown Cleveland, has been trying to sell another bar he owns to ease his workload, but the prospective buyer hasn't been able to raise the money.
Now that the bailout legislation has the green light, he's hopeful he'll get a deal done.
"It passed. Let's work something out," Cavanaugh told the man over a cell phone Friday just after the House approved the plan.
He flipped the phone shut and smiled from behind the weathered mahogany bar of his 75-year-old Irish pub.
"He's going to put the loan request in again. It's looking up," Cavanaugh said.
By STEVENSON JACOBS
Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.
"Housing traditionally does lead the economy through a recovery. I think it's going to be critical for a sustained recovery in this cycle, too," said Gary Thayer, senior economist at Wachovia Securities.
In the meantime, people like Alicia Elliott are adjusting to a new American reality: Life without credit.
The 21-year old Morgantown, W. Va., resident just bought a used mobile home, borrowing $4,000 from friends and family because she couldn't get a bank loan.
"I tried to. Couldn't do it. It's just hard to get a loan," said Elliott, who works as a cashier at a Lowe's Cos. store.
She used to get bombarded with offers for credit cards. Now she can't even get one. "I get denied one after another after another. It doesn't matter if you have a co-signer or not," she said.
Trey Simmons, a 31-year-old barber at a Dallas hair salon, said he worries tighter lending standard will squash his goal of buying a home next year.
"Credit is a privilege everybody can't get," Simmons said. "I had credit at a young age and messed up."
He now operates on a strictly cash basis. "If I don't have it," he said, referring to cash, "I don't spend it."
The dilemma boils down to a matter of trust.
"Credit, by definition, means trust and faith, and for many reasons trust and faith have been damaged," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
Sohn said the near certainty of a recession makes it too risky for the thousands of small and medium-sized banks across the country to lend to people like Elliot.
"Banks know the economy is getting worse, so ... they will keep being cautious," said Sohn, a former banking executive.
Still, the government hopes that by scooping up billions of dollars in bad mortgage debt and other toxic assets, banks eventually can clean up their shaky balance sheets, crack open the vaults and send money washing through the system again.
The rescue plan also raises the federally insured deposit limit from $100,000 to $250,000, a move that could boost banks' reserves and further grease the lending wheels.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and a key negotiator over the past weeks, said the measure was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort comparable to the New Deal.
In the meantime, the Treasury Department is moving swiftly to get the plan started. Treasury Secretary Henry Paulson said Friday he did not wait for final approval of the measure to begin preparation. He has been lining up outside advisers as his staff works out details on a multitude of complex issues.
But several hurdles could trip up the plan. For starters, even when the Treasury starts buying bad assets, some banks may hoard the cash they receive in return until they see how the plan pans out. That has the potential to make the lending logjam worse, said Vincent R. Reinhart, former director of the Federal Reserve's monetary affairs division.
"They may sit on the sidelines and wait to see (the bailout) get some traction. The problem is if everybody sits on the sidelines, nobody gets in the game. It's a risk," he said.
It also creates a vicious cycle: No trust means no lending; tight credit means it's harder to buy a home; the more difficult it is to buy or sell a home, the further home prices will fall; and the further prices drop, the more foreclosures there will be.
U.S. home prices — down 20 percent from their peak in July 2006 — still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away.
But Jim Gillespie, chief executive of Coldwell Banker Real Estate, said he hopes that lower prices, combined with the government's actions will jump-start stagnant demand. The federal bailout plan, he said, "will give people reassurance that mortgage money is available."
Jobs are another big concern. The stranglehold on credit has choked companies big and small that depend on regular inflows of borrowed money to pay employees and stay afloat.
The Labor Department said Friday that employers cut 159,000 jobs in September, the fastest pace of losses in more than five years. Experts say that number will grow as the effects of the credit gridlock course through the economy in coming days and weeks.
The nation's unemployment rate is now 6.1 percent, up from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.
The unemployment rate could rise to as high as 7.5 percent by late 2009, economists predict. If that happens, it would mark the highest since after the 1990-91 recession.
Boosting employment is critical to kick-starting lending because "if jobs are growing, then incomes are a growing, and if incomes are growing then people are consuming," Reinhart said.
Consumers and businesses have retrenched so much that some analysts fear the economy stalled or shrank in the third quarter that ended last week. The Labor Department report Friday showed wage growth for workers is slowing, meaning they'll be more hard-pressed to spend, especially for something as expensive as a home.
Many economists predict the economy will contract in the final quarter of 2008 and the first quarter of next year. That would meet the classic definition of a recession — two consecutive quarters of a shrinking economy.
One bright spot: optimism hasn't been totally squashed yet.
Morgan Cavanaugh, proprietor of Moriarty's Pub in downtown Cleveland, has been trying to sell another bar he owns to ease his workload, but the prospective buyer hasn't been able to raise the money.
Now that the bailout legislation has the green light, he's hopeful he'll get a deal done.
"It passed. Let's work something out," Cavanaugh told the man over a cell phone Friday just after the House approved the plan.
He flipped the phone shut and smiled from behind the weathered mahogany bar of his 75-year-old Irish pub.
"He's going to put the loan request in again. It's looking up," Cavanaugh said.
By STEVENSON JACOBS
Friday, September 12, 2008
A Stronger Dollar and Your Portfolio
Since peaking more than six years ago versus the world’s major currencies, the U.S. dollar has posted some dizzying declines. Only a few currencies in the world have actually declined vis-à-vis the sad buck since late 2001 – including the Zimbabwe dollar. That’s hardly a feet to be proud of considering hyperinflation has gripped the economically ravaged African nation over the last 12 months accompanied by 1,000% inflation.
There’s no doubt that since Nixon broke the gold standard in August 1971 the dollar has plummeted versus the world’s hardest currencies, including gold. Bulging trade and budget deficits, protracted military conflicts, bloated entitlement program spending and lingering financial institution bail-outs amid the ongoing credit crisis bode badly for the dollar longer term.
Indeed, you might say it’s the “beginning of the end” of American financial hegemony as long-term inflation erodes the dollars’ purchasing power and buys less which each passing decade. After all, to finance its enormous expenditures the United States, which is a reserve currency, prints its way out of financial turmoil by expanding the money-supply and growing inflation. The latest financial debacle since August 2007 promises to pile on even more debt, including toxic securities on the Federal Reserve’s balance sheet.
As the years progress, the United States will become even more dependent on foreign governments and institutions to finance its daily consumption, currently running at roughly $2 billion per day, courtesy of international lenders.
But bear markets are interrupted and investors should recognize short-term investment opportunities as a result. That’s exactly what’s happening now with the dollar.
Bull Market or Bear Market Rally?
The tables have turned against global currencies since August 8 when Germany’s mighty economy contracted in the second quarter, triggering one of the biggest dollar rallies in years.
Heading into August, the dollar was down almost 7% versus the euro; but it now trades virtually unchanged since the beginning of the year after hitting an all-time low in July. The buck is also running hard versus other currencies, including the resource units and even Asian currencies.
This current bout of dollar strength has more to do with the surprising weakness of other foreign economies than a resumption of U.S. growth; the market views the dollar as a leading currency as other economies begin to grapple with a slowdown or, in some cases, recession. The United States is aggressively priming the economy with interest rate cuts and fiscal measures to boost consumption, while the Europeans and Japanese only start to enter a slowdown cycle.
In the absence of interest rate hikes, budget cuts or a boost in real consumption under the weight of a credit squeeze and real estate deflation, it’s hard to make a long-term bullish case for the buck; but the market has shifted since early August as global investors embrace the undervalued dollar and the economy’s more compelling growth prospects into 2009 while other major economies sink. That’s giving the dollar a global edge now.
The Hunt for Dollar-based Profits
If I had to bet, the dollar is probably commencing a cyclical bear market rally. That’s exactly what happened in 2005 as the dollar rallied 12.8% versus the euro and other currencies. But in 2005, unlike now, the Fed was raising short-term interest rates after a period of ultra-loose monetary policy under former Fed boss Greenspan. This suggests any rally won’t last very long unless foreign economies deteriorate rapidly while U.S. growth accelerates.
There’s no doubt U.S. assets are cheap. That’s especially the case if you’re a foreign currency-based investor because the dollar is literally “On Sale” after years of double-digit declines since late 2001.
PIMCO Scoops Fannie and Freddie Debt
Some of the best values now lie in distressed mortgage-backed securities like Fannie Mae and Freddie Mac bonds. PIMCO, the world’s largest bond fund manager with over $800 billion in assets, has been aggressively accumulating the debt of both lenders.
Credit spreads for government mortgage agency debt has surged over the last few months and now trade at their highest levels in history compared to Treasury bonds. Premiums are now trading at just under 300 basis points or 3%.
The government has already guaranteed that both crisis-plagued mortgage lenders won’t fail. That means Fannie and Freddie debt is cheap at current prices while shareholders are likely to get wiped-out should the government eventually nationalize Fannie and Freddie.
Busted Properties
Real estate also offers excellent values, particularly from rising foreclosures and bank repossessions. This is exactly what occurred in the 1989-1991 Savings & Loans crisis; several years later, vulture investors earned big profits from buying cheap properties.
In the most devastated real estate markets of Nevada, Arizona, California and Florida, investors can find an abundance of residential and even a growing universe of commercial properties gone bust. To be sure, financing has grown more difficult for even the most creditworthy of borrowers as banks balk at lending. Yet, many deals will be closed over the next few years as banks grow increasingly desperate to unload a truckload of properties at fire-sale prices.
Real estate in the United States is also extremely cheap when priced in euros, yen or most other currencies. In 2007, more than 20% of all residential property purchased in Manhattan was by Europeans. I expect that trend to accelerate in 2008, especially if the euro continues to soften.
Watch Out for Foreign Markets!
Lastly, U.S. stocks offer big values compared to other markets because of the potential to earn organic returns in local currency while foreign markets lose their luster for dollar-based investors.
Over the last seven years, dollar-based investors have earned big profits riding the dollar’s decline combined with huge bull market gains in stock prices. But the opposite might occur now, similar to the 1995 to 1999 period, when U.S. markets outperformed.
A rising dollar has stripped U.S. investors of foreign market returns since late July. Global markets, of course, remain in a bear market since last fall and that includes the United States; since late July, foreign bourses, priced in dollar terms, have declined far more as an 8% surge in the buck adds insult to injury.
Therefore, I expect U.S. stocks to finally benefit from a surge in foreign institutional money after years of net outflows. I also think the huge inflows into foreign equity funds will slow markedly over the next 12 months as mutual fund investors redirect capital to domestic funds, which have badly lagged other markets.
The winds of currency change have arrived. I doubt this is the beginning of a secular long-term U.S. dollar bull market because all the preconditions for such a sustained rally simply don’t exist. Yet, a case can be made for the dollar over the near-term, as other economies trail the United States in the growth cycle and begin cutting interest rates. Lower rates abroad will weaken foreign currencies, and probably, most commodities and boost the value of financial assets (stocks and bonds) following a drubbing since the onset of subprime 13 months ago.
There’s no doubt that since Nixon broke the gold standard in August 1971 the dollar has plummeted versus the world’s hardest currencies, including gold. Bulging trade and budget deficits, protracted military conflicts, bloated entitlement program spending and lingering financial institution bail-outs amid the ongoing credit crisis bode badly for the dollar longer term.
Indeed, you might say it’s the “beginning of the end” of American financial hegemony as long-term inflation erodes the dollars’ purchasing power and buys less which each passing decade. After all, to finance its enormous expenditures the United States, which is a reserve currency, prints its way out of financial turmoil by expanding the money-supply and growing inflation. The latest financial debacle since August 2007 promises to pile on even more debt, including toxic securities on the Federal Reserve’s balance sheet.
As the years progress, the United States will become even more dependent on foreign governments and institutions to finance its daily consumption, currently running at roughly $2 billion per day, courtesy of international lenders.
But bear markets are interrupted and investors should recognize short-term investment opportunities as a result. That’s exactly what’s happening now with the dollar.
Bull Market or Bear Market Rally?
The tables have turned against global currencies since August 8 when Germany’s mighty economy contracted in the second quarter, triggering one of the biggest dollar rallies in years.
Heading into August, the dollar was down almost 7% versus the euro; but it now trades virtually unchanged since the beginning of the year after hitting an all-time low in July. The buck is also running hard versus other currencies, including the resource units and even Asian currencies.
This current bout of dollar strength has more to do with the surprising weakness of other foreign economies than a resumption of U.S. growth; the market views the dollar as a leading currency as other economies begin to grapple with a slowdown or, in some cases, recession. The United States is aggressively priming the economy with interest rate cuts and fiscal measures to boost consumption, while the Europeans and Japanese only start to enter a slowdown cycle.
In the absence of interest rate hikes, budget cuts or a boost in real consumption under the weight of a credit squeeze and real estate deflation, it’s hard to make a long-term bullish case for the buck; but the market has shifted since early August as global investors embrace the undervalued dollar and the economy’s more compelling growth prospects into 2009 while other major economies sink. That’s giving the dollar a global edge now.
The Hunt for Dollar-based Profits
If I had to bet, the dollar is probably commencing a cyclical bear market rally. That’s exactly what happened in 2005 as the dollar rallied 12.8% versus the euro and other currencies. But in 2005, unlike now, the Fed was raising short-term interest rates after a period of ultra-loose monetary policy under former Fed boss Greenspan. This suggests any rally won’t last very long unless foreign economies deteriorate rapidly while U.S. growth accelerates.
There’s no doubt U.S. assets are cheap. That’s especially the case if you’re a foreign currency-based investor because the dollar is literally “On Sale” after years of double-digit declines since late 2001.
PIMCO Scoops Fannie and Freddie Debt
Some of the best values now lie in distressed mortgage-backed securities like Fannie Mae and Freddie Mac bonds. PIMCO, the world’s largest bond fund manager with over $800 billion in assets, has been aggressively accumulating the debt of both lenders.
Credit spreads for government mortgage agency debt has surged over the last few months and now trade at their highest levels in history compared to Treasury bonds. Premiums are now trading at just under 300 basis points or 3%.
The government has already guaranteed that both crisis-plagued mortgage lenders won’t fail. That means Fannie and Freddie debt is cheap at current prices while shareholders are likely to get wiped-out should the government eventually nationalize Fannie and Freddie.
Busted Properties
Real estate also offers excellent values, particularly from rising foreclosures and bank repossessions. This is exactly what occurred in the 1989-1991 Savings & Loans crisis; several years later, vulture investors earned big profits from buying cheap properties.
In the most devastated real estate markets of Nevada, Arizona, California and Florida, investors can find an abundance of residential and even a growing universe of commercial properties gone bust. To be sure, financing has grown more difficult for even the most creditworthy of borrowers as banks balk at lending. Yet, many deals will be closed over the next few years as banks grow increasingly desperate to unload a truckload of properties at fire-sale prices.
Real estate in the United States is also extremely cheap when priced in euros, yen or most other currencies. In 2007, more than 20% of all residential property purchased in Manhattan was by Europeans. I expect that trend to accelerate in 2008, especially if the euro continues to soften.
Watch Out for Foreign Markets!
Lastly, U.S. stocks offer big values compared to other markets because of the potential to earn organic returns in local currency while foreign markets lose their luster for dollar-based investors.
Over the last seven years, dollar-based investors have earned big profits riding the dollar’s decline combined with huge bull market gains in stock prices. But the opposite might occur now, similar to the 1995 to 1999 period, when U.S. markets outperformed.
A rising dollar has stripped U.S. investors of foreign market returns since late July. Global markets, of course, remain in a bear market since last fall and that includes the United States; since late July, foreign bourses, priced in dollar terms, have declined far more as an 8% surge in the buck adds insult to injury.
Therefore, I expect U.S. stocks to finally benefit from a surge in foreign institutional money after years of net outflows. I also think the huge inflows into foreign equity funds will slow markedly over the next 12 months as mutual fund investors redirect capital to domestic funds, which have badly lagged other markets.
The winds of currency change have arrived. I doubt this is the beginning of a secular long-term U.S. dollar bull market because all the preconditions for such a sustained rally simply don’t exist. Yet, a case can be made for the dollar over the near-term, as other economies trail the United States in the growth cycle and begin cutting interest rates. Lower rates abroad will weaken foreign currencies, and probably, most commodities and boost the value of financial assets (stocks and bonds) following a drubbing since the onset of subprime 13 months ago.
Saturday, June 14, 2008
Buy and Bail
A NEW TWIST ON WALKING AWAY FROM A MORTGAGE
In the hardest hit housing markets, some borrowers with a mortgage worth much more than their home are buying a second home before walking away from their primary residence - a strategy known as Buy and Bail.
How It Works: Borrowers can qualify for a second loan by proposing to rent out their existing residence to cover the second mortgage payments. Once they are approved for a loan, they walk away from the existing home instead of renting it out.
Consequences: Homeowners with a foreclosure will take a big hit to their credit and won't be able to purchase a home for five years under new Fannie Mae guidelines. Also, lenders might sue for personal assets and for fraud.
Lenders Respond: Fannie Mae says that later this month, it will release tougher loan qualification guidelines designed to ensure that individuals who plan to rent their first home after buying a second home show proof that they can make both payments.
Real Estate Open Networkers
In the hardest hit housing markets, some borrowers with a mortgage worth much more than their home are buying a second home before walking away from their primary residence - a strategy known as Buy and Bail.
How It Works: Borrowers can qualify for a second loan by proposing to rent out their existing residence to cover the second mortgage payments. Once they are approved for a loan, they walk away from the existing home instead of renting it out.
Consequences: Homeowners with a foreclosure will take a big hit to their credit and won't be able to purchase a home for five years under new Fannie Mae guidelines. Also, lenders might sue for personal assets and for fraud.
Lenders Respond: Fannie Mae says that later this month, it will release tougher loan qualification guidelines designed to ensure that individuals who plan to rent their first home after buying a second home show proof that they can make both payments.
Real Estate Open Networkers
Tuesday, June 10, 2008
Baghdad Real Estate Sizzling Hot
Are you looking to flip a property for profit? The U.S. real estate market may not look so hot, but the Baghdad real estate market is sizzling hot.
There is no mortgage crisis in Baghdad because there are no mortgages. People buy and sell real estate for cash and lots of it these days. The market prices continue to rise like Florida, Las Vegas or California did a few years ago.
Because there is almost no construction in Baghdad since before the war, real estate is limited, causing the market to climb. The decrease in violence of late has added to the boom in prices.
Real Estate Open Networkers
There is no mortgage crisis in Baghdad because there are no mortgages. People buy and sell real estate for cash and lots of it these days. The market prices continue to rise like Florida, Las Vegas or California did a few years ago.
Because there is almost no construction in Baghdad since before the war, real estate is limited, causing the market to climb. The decrease in violence of late has added to the boom in prices.
Real Estate Open Networkers
Saturday, May 24, 2008
Thursday, May 22, 2008
Foreclosure Housing Plan Backed in Virginia
Prince William County supervisors have unanimously backed a plan to help county employees buy foreclosed homes.
Officials say the program would help address both problems from foreclosures and a lack of affordable housing. They say it would cost the county almost nothing.
Under the program, a county employee would select a house to buy and make arrangements with a bank participating in the program. The county would buy a ten-year certificate of deposit that the bank would use to fund the mortgage and provide the buyer a lower interest rate.
Visit the Real Estate Open Networkers
Officials say the program would help address both problems from foreclosures and a lack of affordable housing. They say it would cost the county almost nothing.
Under the program, a county employee would select a house to buy and make arrangements with a bank participating in the program. The county would buy a ten-year certificate of deposit that the bank would use to fund the mortgage and provide the buyer a lower interest rate.
Visit the Real Estate Open Networkers
Wednesday, May 21, 2008
Fort Lauderdale Foreclosures Triple in April
Florida has been hit harder than most states in the country with foreclosures. Broward county is one of the leading counties in Florida in this area.
The foreclosures in Broward tripled this April from the same time last year. In April of 2007 there were 1385 foreclosure actions filed. This April, the court reported that 4124 foreclosure actions filed.
Miami Dade county to the south and Palm Beach county to the north were reporting similar increases.
With all these foreclosures, the real estate market is being flooded with inventory that is driving down real estate prices by the week. According to one Realtor, "50 to 75 per cent of the houses I show are short sales or foreclosures." "These type of properties are in low end housing developments and million dollar neighborhoods as well," he added.
There doesn't seem to be any end in sight with foreclosures in South Florida. We have another 18-36 months with these kind of foreclosure numbers ahead of us.
Real Estate Open Networkers
The foreclosures in Broward tripled this April from the same time last year. In April of 2007 there were 1385 foreclosure actions filed. This April, the court reported that 4124 foreclosure actions filed.
Miami Dade county to the south and Palm Beach county to the north were reporting similar increases.
With all these foreclosures, the real estate market is being flooded with inventory that is driving down real estate prices by the week. According to one Realtor, "50 to 75 per cent of the houses I show are short sales or foreclosures." "These type of properties are in low end housing developments and million dollar neighborhoods as well," he added.
There doesn't seem to be any end in sight with foreclosures in South Florida. We have another 18-36 months with these kind of foreclosure numbers ahead of us.
Real Estate Open Networkers
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