By JAMES R. HAGERTY and KELLY EVANS
December 27, 2007
Wall Street Journal Page A1
A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.
Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor's. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. (See a PDF summary of the report.)
New statistics from the Census Bureau, meanwhile, indicate a slowdown in the number of Americans moving to states that led the housing boom, including Nevada, Florida and Arizona. (See related article.)
The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans' ability to pay. The market is working its way "back to reality," says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.
Some other economists say that might not happen before 2010. "The housing shock is only about halfway over, and housing prices will continue to fall well into 2009," says Lehman Brothers economist Michelle Meyer.
During the housing boom in the first half of this decade, fast-rising home prices made it easy for homeowners to take out home-equity loans or refinance their primary mortgages to extract some cash. That helped sustain consumer spending, which accounts for about 70% of U.S. economic activity.
Economists now worry that falling home prices will prompt consumers to pull back on spending enough to slow growth or even tip the economy into recession. "Eventually what's happening in the housing market is going to catch up with us," says Patrick Newport, an economist at research-firm Global Insight Inc.
Fears of a sharp drop in consumption were assuaged somewhat last week when the government reported that consumer spending in November grew at the fastest pace in 3½ years. And though holiday sales fell short of retailers' expectations, consumers, spurred by discounts, spent heavily in the final days before Christmas. Economists say that even if overall spending slows in December, the strength seen in October and November would be enough to keep the economy afloat in the near term.
"The most important determinant of [spending] is always income," says Harm Bandholz, an economist at UniCredit in New York. He said that Americans' disposable income has risen a "solid" 2.5% over last year. He and others say that as long as the job market holds up and incomes keep growing, Americans will continue to spend.
The S&P/Case-Shiller index showed that some of the fastest declines in home prices are in metropolitan areas that were among the hottest during the housing boom. Prices were down 12.4% from a year earlier in Miami, 11.1% in San Diego, 10.7% in Las Vegas and 10.6% in Phoenix.
Home prices are still up from a year ago in some cities, such as Seattle and Charlotte, N.C. And people who bought their homes several years ago still are sitting on sizable gains in most of the country.
The boom more than doubled prices in many populous areas near the coasts. The run-up was fueled in part by unusually low interest rates, which slashed the cost of monthly mortgage payments. In addition, in the wake of the technology-stock bubble, many Americans viewed real estate as a safer investment than stocks, and so poured increasing sums into second homes and rental properties. Home sales began to slow in mid-2005. Prices leveled off and then started declining in 2006. Over the past year, mortgage defaults have soared, leading to rapid growth in foreclosures.
Bette Zerba, a Realtor with Re/Max in Phoenix, says local residents trying to sell their homes can't compete with foreclosed homes selling for $50,000 to $100,000 less than theirs. "The sellers now are having to reduce their prices by 20% to 30% to compete," she says.
As the market adjusts, single-family housing starts have fallen 55% from their January 2006 peak to a seasonally adjusted annual rate of 829,000. In recent months, lenders and investors have begun owning up to billions of dollars of losses on mortgages and related securities, clearing the decks for an eventual revival in lending.
But the recovery of the housing market is likely to be a gradual process. That's partly because the boom left prices so far out of whack with incomes. As measured by the S&P/Case-Shiller national index, home prices jumped 74% in the six years through 2006. During the same period, U.S. median household income rose 15%. (Neither figure is adjusted for inflation.) That made housing unaffordable for many Americans.
For a few years, lax lending standards -- some loans required no down payments and offered low introductory interest rates -- meant borrowers could buy more expensive houses than they could really afford. But lenders have been burned by a surge in defaults that started in 2006, and such mortgages generally are no longer available. That means house prices will have to fall to a level potential buyers can afford.
Mark Zandi, chief economist of Moody's Economy.com, a research firm in West Chester, Pa., predicts that on average U.S. house prices will decline about 12% by the second quarter of 2009 from their peak in the second quarter of 2006. He expects household income to rise by about the same amount over that period.
Signs of this adjustment are apparent in the latest quarterly analysis of house prices by National City Corp., a Cleveland banking concern, and Global Insight. Economists at the two firms look at home prices in relation to household income and other factors, including population density (an indication of how much land is available) and past differences in prices caused by factors like climate and schools. In the third quarter, they found, prices in 38 of the nation's 330 metro areas were more than 33% above a level that could be explained by fundamental drivers of housing costs. That was down from 48 metro areas in this "overvalued" category in the second quarter.
"Parts of the housing market are scratching bottom right now," says Richard DeKaser, chief economist at National City. Sales of new and existing homes are down about 32% from their mid-2005 peak, he says, and probably won't fall much further before leveling off or starting to recover slowly.
Prices of new homes are likely to start recovering in the first half of 2008 because builders are aggressively chopping prices to clear inventories, says Edward Leamer, an economics professor at the University of California, Los Angeles. Recent price cuts by builders may have reduced demand in the short term because they encourage potential buyers to expect further discounts.
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• Econ Blog: In Case-Shiller Data, Few Metro Areas SparedBut prices of previously occupied homes are likely to continue falling slowly for several years, Prof. Leamer says. That's because people trying to sell their homes often don't have an urgent need to move, and try to hold out for a price they consider fair.
On average, prices of previously occupied homes, as measured by the S&P/Case-Shiller indexes, are likely to drop another 7% in 2008 before flattening out in 2009, says Thomas Lawler, a housing economist in Vienna, Va.
Inventories of unsold homes remain very high and may increase in the new year as lenders dump more foreclosed houses on the market. The number of detached single-family homes listed for sale in October was enough to last 10½ months at the current sales rate, according to the National Association of Realtors. That was more than double the level of two years ago and the highest since 1985.
Along with inventories, the nation's home ownership rate will have to adjust to today's realities as many Americans who stretched too far to buy homes in recent years go back to renting. The home ownership rate in the third quarter stood at 68.2% of households, down from a peak of 69.2% in 2004. Even a small drop in that rate has a big effect on housing demand. Economists at Goldman Sachs have warned that falling home ownership rates may force a further 40% drop in housing starts next year, to an annual rate as low as 500,000 units, before construction starts to recover.
The mortgage market also needs to adjust further. Most of the funding for home loans comes from investors who buy securities backed by bundles of mortgages. Since August, many of those investors have shunned the market amid fears of rising defaults. As a result, lenders generally are focusing on loans that can be sold to government-sponsored investors Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration. So-called jumbo loans -- those above $417,000, too big to be sold to Fannie or Freddie -- have grown much more expensive, deterring buyers in high-cost areas.
The current scarcity of funds available for mortgage lending creates a chicken-and-egg situation, says Prof. Leamer. Investors who provide funding for home loans don't want to commit more money until they believe the housing market is getting better. But it's hard for the housing market to rebound as long as mortgage credit is tight. Lower prices eventually will break this impasse, by luring buyers back into the market and reassuring investors that the market is finding a bottom, he says.
Write to James R. Hagerty at bob.hagerty@wsj.com and Kelly Evans at kelly.evans@wsj.com
Friday, December 28, 2007
Thursday, December 27, 2007
Top Ten Tips When Moving With Your Pet
Buying or selling a home and moving is not only one of the most stressful events in your life, it can also be stressful on your pets.
A Pet Friendly Real Estate Agent like Ray Kutylo and the SCV Home Team can help you plan and prepare to guarantee a stress-free move. Here are a few tips to help start your preparations for a safe move for you and your pets.
1. Identification. Rule #1 in moving with your pet is properly identifying your pet with an identification tag and sturdy collar. A common mistake is to have outdated information on a pet tag. Make sure your pet’s tag includes updated information including destination location and telephone number and a mobile number, so you can be reached easily. An additional method of identification is a microchip, which is injected under the pet’s skin between the shoulder blades and is about the size of a grain of rice. The procedure is simple and similar to administering a vaccine. Microchips can be purchased directly from veterinary clinics, and the prices vary. Some shelters offer discounts for microchipping to people that have adopted shelter animals. If you have an assistance animal, ask your local shelter or Veterinarian if there any discounts for the enrollment fees.
2. Veterinary Records. Notify your Veterinarian you will be moving and ask for a current copy of your pet’s vaccinations. Your Veterinarian may also provide you with a copy of your pet’s full medical history to provide to your new Veterinarian, but in most cases medical history can be faxed to your new Veterinarian upon request. Keep your pet’s medical history in a convenient location during your move and not packed away in the moving truck. Depending on your destination, your pet may also need additional vaccinations, medications, and health certificates. Have your current veterinarian’s phone number handy in case of an emergency or if your new veterinarian needs more information about your pet.
3. Medications and Food. Keep at least one week’s worth of food and medication in case of emergency. Veterinarians cannot write a prescription without a prior doctor/patient relationship. This means that before you can get any prescription medications, your pet will need to be examined first by its new doctor. This may be inconvenient if you need medication right away. Discuss your pet’s medical needs with your Veterinarian and they can provide you with a prescription before your move if necessary. This includes special therapeutic foods - purchase an extra supply in case you can’t find the food right away in your new area.
4. Keeping your pet secure. Pets can feel vulnerable on moving day. Keep your pet in a safe, quiet, well ventilated place, such as the bathroom on moving day with a PETS INSIDE sign on the door to keep off-limits to friends and movers. There are many different types of travel crates on the market, and many are lightweight and collapsible just for traveling purposes. Make sure your pet is familiar with the crate you will be using for transportation by gradually introducing him to the crate before your trip. Be sure the crate is well ventilated and sturdy enough for stress-chewers or your pet could make an escape.
5. First Aid Kit. First aid is not a substitute for emergency veterinary care, but being prepared and knowing basic first aid could save your pet’s life. A few recommended supplies for a basic first aid kit include: Your veterinarian’s phone number, Gauze to wrap wounds or muzzle animal, Adhesive tape for bandages, Non-stick bandages, Towels, and Hydrogen peroxide (3 percent). You can use a door, board, blanket or floor mat as an emergency Stretcher and a soft cloth, rope, necktie, leash or nylon stocking for an emergency muzzle.
6. Traveling by car. It is best to travel with your dog in a crate, but if your dog enjoys car travel, you may want to accustom him to a restraining harness. For your safety as well as theirs, it is ALWAYS best to transport cats in a well ventilated carrier. Secure the crate with a seat belt and provide your pet with familiar toys. Never keep your pet in the open bed of a truck, or the storage area of a moving van. In any season, a pet left alone in a parked vehicle is vulnerable to being injured, harmed or stolen. Plan ahead by searching for pet friendly hotels to find overnight lodging during your move, and have plenty of kitty litter and plastic bags on hand for Doggy Duty. Try to keep your pet on his regular diet and eating schedule and bring along bottled water to avoid upset stomach or diarrhea. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
7. Air Travel. If traveling by air, first check with the airline about any pet requirements or restrictions to be sure you have prepared your pet to be safe and secure during the trip. Some airlines will allow pets in the cabin, depending on the size of the pet, but you will need to purchase a special airline crate that fits under the seat in front of you. Give yourself plenty of time to work out any arrangements necessary including consulting with your veterinarian, and the U.S. Department of Agriculture. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
8. Finding a Veterinary Clinic, Specialty and Emergency Hospital. Before you move, ask your veterinarian to recommend another doctor in your new area. Talk to other pet owners in your new area. Call the state veterinary medical association (VMA) for Veterinarians in your location. Once you have selected a Veterinary Hospital ask for an impromptu tour as kennels should be kept clean at all times, not just when a client is ‘expected’. You may also want to schedule an appointment to meet the doctors. Now go through the following checklist: Are the receptionists, doctors, technicians, assistants friendly, professional and knowledgeable? Are the office hours and location convenient? Does the clinic offer emergency or specialty services or boarding? If the Veterinary Hospital that you have selected does not meet these criteria, you may want to keep looking so you can be assured that your pet is receiving the best possible care.
9. Preparing your new home. Keep in mind that your pets may be frightened and confused in new surroundings. To reduce the chance of escaping due to fear, or pure excitement to explore the new territory, prepare all the familiar and necessary things your pet will need from day one including food, water, medications, bed, litter box, food and water bowls. Pack these items last, so they can be immediately unpacked and available for your pet in a secure room when you arrive at your new home. Remember to keep all external windows and doors closed when your pet is unsupervised. Be cautious of unsupervised areas in the kitchen or utility areas as nervous pets can seek refuge in narrow gaps behind or between appliances. If your new home is nearby, your pet may be confused and find a way back to your old home. Notify the new homeowners of your new address and ask them to contact you if your pet is found in the neighborhood.
10. Learn more about your new area. Once you find a new Veterinarian, ask if there are any local disease concerns such as heartworm or Lyme disease as well as vaccinations or medications your pet may require. Also, be aware of any unique laws. For example, there are restrictive breed laws in some cities. Contact the city or travel information bureau for more information as your pet may be affected by these laws. If you will be traveling internationally, always remember to have your pet examined by a Veterinarian and carry an updated rabies vaccination and health certificate. It is very important to contact the Agriculture Department or embassy of the country or state to where you are traveling to obtain specific information on special documents, quarantine, or costs to bring the animal into the country.
SOURCE: The Pet Realty Network™ Library
A Pet Friendly Real Estate Agent like Ray Kutylo and the SCV Home Team can help you plan and prepare to guarantee a stress-free move. Here are a few tips to help start your preparations for a safe move for you and your pets.
1. Identification. Rule #1 in moving with your pet is properly identifying your pet with an identification tag and sturdy collar. A common mistake is to have outdated information on a pet tag. Make sure your pet’s tag includes updated information including destination location and telephone number and a mobile number, so you can be reached easily. An additional method of identification is a microchip, which is injected under the pet’s skin between the shoulder blades and is about the size of a grain of rice. The procedure is simple and similar to administering a vaccine. Microchips can be purchased directly from veterinary clinics, and the prices vary. Some shelters offer discounts for microchipping to people that have adopted shelter animals. If you have an assistance animal, ask your local shelter or Veterinarian if there any discounts for the enrollment fees.
2. Veterinary Records. Notify your Veterinarian you will be moving and ask for a current copy of your pet’s vaccinations. Your Veterinarian may also provide you with a copy of your pet’s full medical history to provide to your new Veterinarian, but in most cases medical history can be faxed to your new Veterinarian upon request. Keep your pet’s medical history in a convenient location during your move and not packed away in the moving truck. Depending on your destination, your pet may also need additional vaccinations, medications, and health certificates. Have your current veterinarian’s phone number handy in case of an emergency or if your new veterinarian needs more information about your pet.
3. Medications and Food. Keep at least one week’s worth of food and medication in case of emergency. Veterinarians cannot write a prescription without a prior doctor/patient relationship. This means that before you can get any prescription medications, your pet will need to be examined first by its new doctor. This may be inconvenient if you need medication right away. Discuss your pet’s medical needs with your Veterinarian and they can provide you with a prescription before your move if necessary. This includes special therapeutic foods - purchase an extra supply in case you can’t find the food right away in your new area.
4. Keeping your pet secure. Pets can feel vulnerable on moving day. Keep your pet in a safe, quiet, well ventilated place, such as the bathroom on moving day with a PETS INSIDE sign on the door to keep off-limits to friends and movers. There are many different types of travel crates on the market, and many are lightweight and collapsible just for traveling purposes. Make sure your pet is familiar with the crate you will be using for transportation by gradually introducing him to the crate before your trip. Be sure the crate is well ventilated and sturdy enough for stress-chewers or your pet could make an escape.
5. First Aid Kit. First aid is not a substitute for emergency veterinary care, but being prepared and knowing basic first aid could save your pet’s life. A few recommended supplies for a basic first aid kit include: Your veterinarian’s phone number, Gauze to wrap wounds or muzzle animal, Adhesive tape for bandages, Non-stick bandages, Towels, and Hydrogen peroxide (3 percent). You can use a door, board, blanket or floor mat as an emergency Stretcher and a soft cloth, rope, necktie, leash or nylon stocking for an emergency muzzle.
6. Traveling by car. It is best to travel with your dog in a crate, but if your dog enjoys car travel, you may want to accustom him to a restraining harness. For your safety as well as theirs, it is ALWAYS best to transport cats in a well ventilated carrier. Secure the crate with a seat belt and provide your pet with familiar toys. Never keep your pet in the open bed of a truck, or the storage area of a moving van. In any season, a pet left alone in a parked vehicle is vulnerable to being injured, harmed or stolen. Plan ahead by searching for pet friendly hotels to find overnight lodging during your move, and have plenty of kitty litter and plastic bags on hand for Doggy Duty. Try to keep your pet on his regular diet and eating schedule and bring along bottled water to avoid upset stomach or diarrhea. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
7. Air Travel. If traveling by air, first check with the airline about any pet requirements or restrictions to be sure you have prepared your pet to be safe and secure during the trip. Some airlines will allow pets in the cabin, depending on the size of the pet, but you will need to purchase a special airline crate that fits under the seat in front of you. Give yourself plenty of time to work out any arrangements necessary including consulting with your veterinarian, and the U.S. Department of Agriculture. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
8. Finding a Veterinary Clinic, Specialty and Emergency Hospital. Before you move, ask your veterinarian to recommend another doctor in your new area. Talk to other pet owners in your new area. Call the state veterinary medical association (VMA) for Veterinarians in your location. Once you have selected a Veterinary Hospital ask for an impromptu tour as kennels should be kept clean at all times, not just when a client is ‘expected’. You may also want to schedule an appointment to meet the doctors. Now go through the following checklist: Are the receptionists, doctors, technicians, assistants friendly, professional and knowledgeable? Are the office hours and location convenient? Does the clinic offer emergency or specialty services or boarding? If the Veterinary Hospital that you have selected does not meet these criteria, you may want to keep looking so you can be assured that your pet is receiving the best possible care.
9. Preparing your new home. Keep in mind that your pets may be frightened and confused in new surroundings. To reduce the chance of escaping due to fear, or pure excitement to explore the new territory, prepare all the familiar and necessary things your pet will need from day one including food, water, medications, bed, litter box, food and water bowls. Pack these items last, so they can be immediately unpacked and available for your pet in a secure room when you arrive at your new home. Remember to keep all external windows and doors closed when your pet is unsupervised. Be cautious of unsupervised areas in the kitchen or utility areas as nervous pets can seek refuge in narrow gaps behind or between appliances. If your new home is nearby, your pet may be confused and find a way back to your old home. Notify the new homeowners of your new address and ask them to contact you if your pet is found in the neighborhood.
10. Learn more about your new area. Once you find a new Veterinarian, ask if there are any local disease concerns such as heartworm or Lyme disease as well as vaccinations or medications your pet may require. Also, be aware of any unique laws. For example, there are restrictive breed laws in some cities. Contact the city or travel information bureau for more information as your pet may be affected by these laws. If you will be traveling internationally, always remember to have your pet examined by a Veterinarian and carry an updated rabies vaccination and health certificate. It is very important to contact the Agriculture Department or embassy of the country or state to where you are traveling to obtain specific information on special documents, quarantine, or costs to bring the animal into the country.
SOURCE: The Pet Realty Network™ Library
The Five Miracles of 2008
When someone agrees to give me referrals and asks for a few of my business cards, five miracles have to happen for me to get the referral.
1) They don't lose my card.
2) They have my card with them when them when the topic comes up.
3) They remember to give out my card.
4) The referral doesn't lose my card.
5) The referral actually picks up the phone and calls.
Could I please collect a quarter for all the times people have told me that they referred someone to me... and I get no call! I'm not saying don't give our my cards. What I am saying is... think about the Five Miracles.
Let me teach you how to refer people to me.
When you meet someone who can benefit from my service, just as you did, simply ask their permission for me to contact them. Then call me with their information and I will follow up with them. There is obviously no cost or obligation on their part and I will never pressure them. My job is to make you look good. Ok... Great. By the way, all referrals to me are rewarded.
1) They don't lose my card.
2) They have my card with them when them when the topic comes up.
3) They remember to give out my card.
4) The referral doesn't lose my card.
5) The referral actually picks up the phone and calls.
Could I please collect a quarter for all the times people have told me that they referred someone to me... and I get no call! I'm not saying don't give our my cards. What I am saying is... think about the Five Miracles.
Let me teach you how to refer people to me.
When you meet someone who can benefit from my service, just as you did, simply ask their permission for me to contact them. Then call me with their information and I will follow up with them. There is obviously no cost or obligation on their part and I will never pressure them. My job is to make you look good. Ok... Great. By the way, all referrals to me are rewarded.
Tuesday, December 25, 2007
A Brief History of Christmas
By JOHN STEELE GORDON
December 21, 2007;
Wall Street Journal Page A19
Christmas famously "comes but once a year." In fact, however, it comes twice. The Christmas of the Nativity, the manger and Christ child, the wise men and the star of Bethlehem, "Silent Night" and "Hark the Herald Angels Sing" is one holiday. The Christmas of parties, Santa Claus, evergreens, presents, "Rudolph the Red-Nosed Reindeer" and "Jingle Bells" is quite another.
But because both celebrations fall on Dec. 25, the two are constantly confused. Religious Christians condemn taking "the Christ out of Christmas," while First Amendment absolutists see a threat to the separation of church and state in every poinsettia on public property and school dramatization of "A Christmas Carol."
A little history can clear things up.
Click for MORE
December 21, 2007;
Wall Street Journal Page A19
Christmas famously "comes but once a year." In fact, however, it comes twice. The Christmas of the Nativity, the manger and Christ child, the wise men and the star of Bethlehem, "Silent Night" and "Hark the Herald Angels Sing" is one holiday. The Christmas of parties, Santa Claus, evergreens, presents, "Rudolph the Red-Nosed Reindeer" and "Jingle Bells" is quite another.
But because both celebrations fall on Dec. 25, the two are constantly confused. Religious Christians condemn taking "the Christ out of Christmas," while First Amendment absolutists see a threat to the separation of church and state in every poinsettia on public property and school dramatization of "A Christmas Carol."
A little history can clear things up.
Click for MORE
Friday, December 21, 2007
Mortgage Insurance Premiums Now Tax Deductable
The U.S. House of Representatives voted this week making mortgage insurance premiums tax deductible for all mortgages originated for the next three years. The Senate passed this legislation last week by unanimous consent. Mortgage insurance first became tax deductible in 2007.
Eligible homeowners with adjusted gross incomes of $100,000 or less can deduct the full cost of their mortgage insurance premiums under the new legislation. Families with incomes between $100,000 and $109,000 can be eligible for a reduced deduction.
This means that a borrower in a 25% marginal tax bracket who takes out a $300,000 mortgage during the next three years, may see an additional $53 in tax savings* per month or $636 in tax savings* per year, making homeownership more affordable.
You can obtain additional information at the IRS web site, www.irs.gov.
*Tax savings example based on a premium rate of 0.85% on a 100% LTV interest only PLUSSM loan generating annual deductible premiums of $2,550 ($300,000 x 0.85%) multiplied by a 25% marginal tax rate (e.g. married couple filing jointly with taxable income of $63,700 or more) yielding a tax savings of $53 per month in 2007.
Eligible homeowners with adjusted gross incomes of $100,000 or less can deduct the full cost of their mortgage insurance premiums under the new legislation. Families with incomes between $100,000 and $109,000 can be eligible for a reduced deduction.
This means that a borrower in a 25% marginal tax bracket who takes out a $300,000 mortgage during the next three years, may see an additional $53 in tax savings* per month or $636 in tax savings* per year, making homeownership more affordable.
You can obtain additional information at the IRS web site, www.irs.gov.
*Tax savings example based on a premium rate of 0.85% on a 100% LTV interest only PLUSSM loan generating annual deductible premiums of $2,550 ($300,000 x 0.85%) multiplied by a 25% marginal tax rate (e.g. married couple filing jointly with taxable income of $63,700 or more) yielding a tax savings of $53 per month in 2007.
California & Florida Top Sales Price Drop, Foreclosure Rise Lists
Home prices fell in 21 states from October 2006 through October 207 and dropped in 21 of 31 major metro areas reported in a study released today by First American Corp.'s LoanPerformance.
The price of single-family detached homes tumbled 15.7 percent in the Riverside-San Bernardino-Ontario, Calif., market area from October 2006 to October 2007, according to the LoanPerformance Home Price Index, which analyzes data for repeat sales transactions.
And six of the eight local market areas tracked in the report that experienced double-digit price declines from October 2006 to October 2007 are in Florida or California, based on single-family detached housing sales data. Las Vegas and Phoenix also saw a double-digit drop in home prices during the study period.
California, Florida, Nevada and Arizona also appear in the top-10 list of states with the highest rate of foreclosure filings in the nation during November, released today by real estate data company RealtyTrac.
The price of single-family detached homes tumbled 15.7 percent in the Riverside-San Bernardino-Ontario, Calif., market area from October 2006 to October 2007, according to the LoanPerformance Home Price Index, which analyzes data for repeat sales transactions.
And six of the eight local market areas tracked in the report that experienced double-digit price declines from October 2006 to October 2007 are in Florida or California, based on single-family detached housing sales data. Las Vegas and Phoenix also saw a double-digit drop in home prices during the study period.
California, Florida, Nevada and Arizona also appear in the top-10 list of states with the highest rate of foreclosure filings in the nation during November, released today by real estate data company RealtyTrac.
Tuesday, December 18, 2007
Fed Proposes New Mortgage Rules
The Federal Reserve has proposed new regulation of mortgage providers which will lead to more disclosure by lenders, without restricting access to credit. Or so says this CNBC video report.
You can view it by clicking http://www.cnbc.com/id/15840232?video=610627371
You can view it by clicking http://www.cnbc.com/id/15840232?video=610627371
Sunday, December 16, 2007
Tracking the Truth on Foreclosures
RealtyTrac's data is oft-cited by the media, but some question its accuracy
by Andrew Galvin
The Orange County Register
If ever there were a public relations success story, RealtyTrac is it. The Irvine-based firm's monthly news releases, chock-full of state-by-state foreclosure counts, are devoured by a national media ravenous for data on what many consider a developing crisis. But questions are being raised about whether the firm's oft-cited numbers overstate the real dimensions of the foreclosure problem. And that could create a problem for the company's credibility.
For example, last year, RealtyTrac's data showed Colorado had the nation's highest foreclosure rate. That didn't sit well with state officials, who decided to do their own count of foreclosures and came up with a figure much smaller than RealtyTrac's. Then, in July, RealtyTrac reported 12,602 foreclosure actions in Georgia, giving the state the nation's second-highest foreclosure rate. When the Atlanta Journal-Constitution looked into the numbers, the newspaper found that RealtyTrac had counted more than 2,000 properties twice and sometimes more. RealtyTrac acknowledges it isn't perfect but says its data offers comprehensiveness and context that other providers don't.
Why the discrepancies?
The main reason is that RealtyTrac counts every step in the foreclosure process. So if a home goes into default on its mortgage, is scheduled for auction and then repossessed by a bank, RealtyTrac counts that home three times. RealtyTrac counted 54,747 "foreclosure actions" in Colorado last year. That number wasn't useful because it didn't reflect how many homeowners were actually in danger of losing their homes, said Ryan McMaken, spokesman for the Colorado Division of Housing. "We couldn't really use those numbers for having serious discussions," he said. So McMaken put an intern to work calling all of the state's 64 counties to get a count of how many homes entered the foreclosure process last year. The number he came up with: 28,435.
This summer, partly in response to criticism, RealtyTrac began sorting its numbers to compile a separate count of properties in foreclosure, in addition to total foreclosure actions. RealtyTrac's "unique property" count, published quarterly, found 19,411 properties in foreclosure in Colorado in the first half of this year. That's within a few dozen of the 19,460 counted by McMaken. "I think they're getting a lot closer now," McMaken said, adding that "we might not have to collect our own numbers" anymore.
In the Georgia situation, RealtyTrac admitted it erred. It revised its July count for the state to 8,461 foreclosure actions, down from its initial count of 12,602. "The reporting error resulted from a combination of overlapping data coverage in some areas of Georgia and an anomaly in the formatting of some of the foreclosure records in those overlapping areas," the company said.
RealtyTrac could probably mute much of the criticism of its data if it simply published its unique properties count every month in addition to its total filings count. That's something the company is considering doing next year, said Rick Sharga, RealtyTrac's vice president of marketing.
Does it matter how the data are counted? Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., argues that it does. Figures that overstate problems in the housing market "become sort of a self-fulfilling prophecy in that people are afraid to go out and look for a home," Kyser said. Moreover, inflated data on foreclosures could prompt politicians to push through ill-considered mortgage reforms. "You do something that's good, but it's the law of unintended consequences," Kyser said.
Other factors that could cause RealtyTrac's counts to be higher than others: the company doesn't filter out duplicate filings if two or more loans on the same property go into default, and its monthly reports are based on the date that foreclosure actions enter its database, rather than the recording dates, Sharga said. "We're not perfect; we don't claim to be," Sharga said. "When we do find a mistake, we fix it … and try not to replicate that."
by Andrew Galvin
The Orange County Register
If ever there were a public relations success story, RealtyTrac is it. The Irvine-based firm's monthly news releases, chock-full of state-by-state foreclosure counts, are devoured by a national media ravenous for data on what many consider a developing crisis. But questions are being raised about whether the firm's oft-cited numbers overstate the real dimensions of the foreclosure problem. And that could create a problem for the company's credibility.
For example, last year, RealtyTrac's data showed Colorado had the nation's highest foreclosure rate. That didn't sit well with state officials, who decided to do their own count of foreclosures and came up with a figure much smaller than RealtyTrac's. Then, in July, RealtyTrac reported 12,602 foreclosure actions in Georgia, giving the state the nation's second-highest foreclosure rate. When the Atlanta Journal-Constitution looked into the numbers, the newspaper found that RealtyTrac had counted more than 2,000 properties twice and sometimes more. RealtyTrac acknowledges it isn't perfect but says its data offers comprehensiveness and context that other providers don't.
Why the discrepancies?
The main reason is that RealtyTrac counts every step in the foreclosure process. So if a home goes into default on its mortgage, is scheduled for auction and then repossessed by a bank, RealtyTrac counts that home three times. RealtyTrac counted 54,747 "foreclosure actions" in Colorado last year. That number wasn't useful because it didn't reflect how many homeowners were actually in danger of losing their homes, said Ryan McMaken, spokesman for the Colorado Division of Housing. "We couldn't really use those numbers for having serious discussions," he said. So McMaken put an intern to work calling all of the state's 64 counties to get a count of how many homes entered the foreclosure process last year. The number he came up with: 28,435.
This summer, partly in response to criticism, RealtyTrac began sorting its numbers to compile a separate count of properties in foreclosure, in addition to total foreclosure actions. RealtyTrac's "unique property" count, published quarterly, found 19,411 properties in foreclosure in Colorado in the first half of this year. That's within a few dozen of the 19,460 counted by McMaken. "I think they're getting a lot closer now," McMaken said, adding that "we might not have to collect our own numbers" anymore.
In the Georgia situation, RealtyTrac admitted it erred. It revised its July count for the state to 8,461 foreclosure actions, down from its initial count of 12,602. "The reporting error resulted from a combination of overlapping data coverage in some areas of Georgia and an anomaly in the formatting of some of the foreclosure records in those overlapping areas," the company said.
RealtyTrac could probably mute much of the criticism of its data if it simply published its unique properties count every month in addition to its total filings count. That's something the company is considering doing next year, said Rick Sharga, RealtyTrac's vice president of marketing.
Does it matter how the data are counted? Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., argues that it does. Figures that overstate problems in the housing market "become sort of a self-fulfilling prophecy in that people are afraid to go out and look for a home," Kyser said. Moreover, inflated data on foreclosures could prompt politicians to push through ill-considered mortgage reforms. "You do something that's good, but it's the law of unintended consequences," Kyser said.
Other factors that could cause RealtyTrac's counts to be higher than others: the company doesn't filter out duplicate filings if two or more loans on the same property go into default, and its monthly reports are based on the date that foreclosure actions enter its database, rather than the recording dates, Sharga said. "We're not perfect; we don't claim to be," Sharga said. "When we do find a mistake, we fix it … and try not to replicate that."
Thursday, December 13, 2007
Navigating the Rate Freeze Plan
'Navigating the Bush Administration's Rate Freeze Program' is a terrific interactive webpage provided by the Wall Street Journal. If you think you may qualify or if you are just interested in who can be a big winner in this limited bulwark against what looks like a potential fiasco.
Just my opinion, of course.
http://online.wsj.com/public/resources/documents/info-SubPrime_Points071206.html
Just my opinion, of course.
http://online.wsj.com/public/resources/documents/info-SubPrime_Points071206.html
Saturday, December 08, 2007
Identity Theft Solution
Identity theft is becoming an increasing problem in the US, and the criminals are getting more and more sophisticated. It can be a nightmare sorting out a problem if you have one.
ID Theft Assist is a company which offers Identity Theft insurance but with a whole lot more as well. They will monitor daily your credit reports to see if someone is trying to steal your identity and alert you if there is a problem, and they have a staff which will help you do the actual work of sorting out problems if you have one. They charge a reasonable $149 a year, which like most insurance is a waste if you don't need it, but a lifesaver if you do.
You should check them out by clicking on the following link. You can click on the link to "what we do" and especially the letters from satisfied customers. I hope you never have a problem but we live in a day and age when such problems are only going to increase. http://www.idtheftassistsubscription.com
ID Theft Assist is a company which offers Identity Theft insurance but with a whole lot more as well. They will monitor daily your credit reports to see if someone is trying to steal your identity and alert you if there is a problem, and they have a staff which will help you do the actual work of sorting out problems if you have one. They charge a reasonable $149 a year, which like most insurance is a waste if you don't need it, but a lifesaver if you do.
You should check them out by clicking on the following link. You can click on the link to "what we do" and especially the letters from satisfied customers. I hope you never have a problem but we live in a day and age when such problems are only going to increase. http://www.idtheftassistsubscription.com
Friday, December 07, 2007
Foreclosure relief plan draws mixed response. What do you think?
Opinions are all over the board on what to do [if anything] for the housing market. Please take a look at this article and then post a reply with your opinion! Thanks. Ray
Some view interest rate freeze as more harmful than helpful
Thursday, December 06, 2007
By Glenn Roberts Jr.
Inman News
A plan to freeze interest rates for a segment of homeowners who face the prospect of foreclosure is either political grandstanding, a delaying tactic, a finger attempting to plug a bursting dam, or the right cure for an ailing market, depending on who you talk to in the real estate brokerage community.
Real estate agents and brokers are definitely talking about the Bush administration's effort to bring together mortgage-market players in a program to assist some distressed subprime borrowers to refinance into safer loans and avoid resetting rates that would lead to more defaults.
An estimated 1.2 million subprime borrowers with adjustable-rate mortgages would be eligible to participate in a fast-track process to refinance or apply for modified loan terms under this program, the Treasury Department announced this morning.
The Treasury Department estimated that perhaps 1.8 million owner-occupied subprime mortgage resets will occur in 2008 and 2009. Treasury Secretary Henry M. Paulson Jr. noted that the plan announced today is "a private sector effort, involving no government money."
Even before the details of the bailout plan were revealed, real estate industry professionals were already talking about the potential impact to consumers and the real estate industry.
Some real estate professionals commented in online forums that they preferred to let the market problems run their course and do not favor any efforts to intervene, and some said a rate freeze could potentially do more harm than good to the overall housing market.
"I think it's going to be a negative," said Samuel Marcus, an associate broker for Century 21 Laffey Associates in Long Island, N.Y.
"I don't think it's going to help the market -- I think it's going to hurt the market, and it's going to cost somebody a lot of money, be it taxpayers or buyers who went with a conventional mortgage."
Marcus said he feels for people who were misguided or chose home loans that got them in over their heads, and a bailout program could have short-term benefits but will not likely solve all of the market troubles.
"I would favor no federal intervention. I think we have to lick our wounds and move forward. We should work on changing the system so something like this doesn't happen again," he said.
The program seems to have been brought out through political posturing, he said.
In addition to the Bush administration's efforts to put the rate-freeze plan together for distressed homeowners, Democratic presidential candidates Hillary Rodham Clinton and John Edwards also announced proposals this week to curb foreclosures, and Clinton criticized the Bush plan as too weak.
Clinton's own proposal would have set a 90-day foreclosure moratorium and a five-year rate freeze for some troubled borrowers.
"I think it's grandstanding," said Mike Jaquish, an associate broker for Keller Williams Realty in Cary, N.C.
He said that a plan to freeze mortgage rates might harm liquidity in the mortgage market, as it could sap motivation from investors to purchase mortgage-backed securities.
If investor confidence in the mortgage market sinks further, that could make it harder for entry-level buyers, he said.
"I don't think (this) is going to make things easier for much of anyone," he said.
The principal of interfering with money markets could have a more dire impact on mortgage financing than the foreclosure problem, and he generally favors a hands-off approach to the workings of the market.
But he acknowledged that there are some very real problems with foreclosures. "I'm concerned about the overall status of the market. We've upset the apple cart big time. An adjustment is going to be made. If things get as grim as people say, the (Federal Housing Administration) is going to be the lender of choice."
Ultimately, the mortgage problems may heavily leverage the country, he said.
Realtor Krista Fuchs of Prudential Fox & Roach of Exton, Pa., said, "Something has to be done to stop the cycle of homes going into foreclosure," which can drive up inventory and drive down local home prices, potentially fueling more foreclosures.
But a rate freeze has pitfalls, too. "Freezing the rates will cause problems, possibly lawsuits," she said. "Hopefully, it won't deter future investors from buying mortgages. If that happens then the industry and economy is in much bigger trouble than we are now."
The problem is bigger than a "silver bullet fix," she said, and it appears "it's just the beginning."
Mark Anderson does see a silver lining, though, to a rate-freeze program. "If people are going to be losing homes, and they can keep them at a reduced rate or a current rate, I think it helps everybody. I think it helps Realtors, I think it helps mortgage investors," said Anderson, a Realtor for Keller Williams Classic Realty in Coon Rapids, Minn.
Buyers who were expecting a "huge fire sale" on homes may not like the idea of a rate freeze, Anderson said. "They want the market to continue sinking. But at the end of the day it's going to be helpful for everyone. It certainly beats the alternative of all those folks losing homes over the next five years."
And while there may be worries about lawsuits, Anderson said that was surely a part of the discussion in putting together a rate-freeze plan. "This could only be good for (investors)," he said, "They're not going to lose as much."
He added, "The breathing room and extra time should allow people with marginal credit to qualify and refinance themselves out of their adjusting ARMs."
The National Association of Realtors announced its support for the Bush administration's efforts to curb the rise in foreclosures by allowing loan modifications or a freeze in interest rates for some borrowers.
"The dream of homeownership should not turn into a family's worst nightmare," Richard Gaylord, NAR's 2007 president, said in a statement. "The loan modification program introduced by President Bush and U.S. Treasury Secretary Henry Paulson is a good first step in helping deserving families keep their homes."
The association also supports Fannie Mae and Freddie Mac reforms such as an increase in the conforming loan limit to aid home buyers in high-cost markets and improve mortgage liquidity, and also supports FHA modernization legislation.
Jerry Howard, president of the National Association of Home Builders, said that the plan has "the potential to get us out of this down cycle that we're in," as it could stabilize home prices and renew demand in new homes.
The home-building industry, he said, may start to see that increase in demand manifest itself in the second quarter of the year, with an increase in production by the third quarter.
He said that he didn't know how many owners of new homes might be eligible for the mortgage relief program introduced today.
Jennifer Bukaty, a broker for Bridgetown Realty Inc. in Portland, Ore., said she doesn't believe a rate-freeze plan is ultimately going to succeed because she believes there are too many legal complications.
She said that part of living in a free country is accepting responsibility for your actions.
"I think individual people made individual choices. I'm sorry about the mortgage industry, as well. I think the good ones are writing good, solid loans and doing the right thing," she said.
She acknowledges that the average consumer may not understand the intricacies of mortgage financing, adding that she directs her own clients to stay within their means and does not lead them to seek risky loans.
It might be more worthwhile to focus resources on the perpetrators of mortgage fraud, said Lenn Harley, broker for Homefinders.com, a real estate company that operates in Maryland, Virginia and Florida.
"I can't stand things that are unfair, and there's going to be a great deal of unfairness in this (plan)," she said.
She said any bailout plan will not prevent the inevitable -- properties that are already in a foreclosure process, though it may delay rather than prevent some aspects of the market downturn.
"Sooner or later the market will rule and when the market rules all of those people who didn't make mortgage payments go into foreclosure," she said.
Prices have been rising at a much faster clip than income, she said, and those prices will have to come down. "This isn't going to help," she said. "It's all political."
***
What's your opinion? Send your Letter to the Editor to Ray@SCVhometeam.com .
Some view interest rate freeze as more harmful than helpful
Thursday, December 06, 2007
By Glenn Roberts Jr.
Inman News
A plan to freeze interest rates for a segment of homeowners who face the prospect of foreclosure is either political grandstanding, a delaying tactic, a finger attempting to plug a bursting dam, or the right cure for an ailing market, depending on who you talk to in the real estate brokerage community.
Real estate agents and brokers are definitely talking about the Bush administration's effort to bring together mortgage-market players in a program to assist some distressed subprime borrowers to refinance into safer loans and avoid resetting rates that would lead to more defaults.
An estimated 1.2 million subprime borrowers with adjustable-rate mortgages would be eligible to participate in a fast-track process to refinance or apply for modified loan terms under this program, the Treasury Department announced this morning.
The Treasury Department estimated that perhaps 1.8 million owner-occupied subprime mortgage resets will occur in 2008 and 2009. Treasury Secretary Henry M. Paulson Jr. noted that the plan announced today is "a private sector effort, involving no government money."
Even before the details of the bailout plan were revealed, real estate industry professionals were already talking about the potential impact to consumers and the real estate industry.
Some real estate professionals commented in online forums that they preferred to let the market problems run their course and do not favor any efforts to intervene, and some said a rate freeze could potentially do more harm than good to the overall housing market.
"I think it's going to be a negative," said Samuel Marcus, an associate broker for Century 21 Laffey Associates in Long Island, N.Y.
"I don't think it's going to help the market -- I think it's going to hurt the market, and it's going to cost somebody a lot of money, be it taxpayers or buyers who went with a conventional mortgage."
Marcus said he feels for people who were misguided or chose home loans that got them in over their heads, and a bailout program could have short-term benefits but will not likely solve all of the market troubles.
"I would favor no federal intervention. I think we have to lick our wounds and move forward. We should work on changing the system so something like this doesn't happen again," he said.
The program seems to have been brought out through political posturing, he said.
In addition to the Bush administration's efforts to put the rate-freeze plan together for distressed homeowners, Democratic presidential candidates Hillary Rodham Clinton and John Edwards also announced proposals this week to curb foreclosures, and Clinton criticized the Bush plan as too weak.
Clinton's own proposal would have set a 90-day foreclosure moratorium and a five-year rate freeze for some troubled borrowers.
"I think it's grandstanding," said Mike Jaquish, an associate broker for Keller Williams Realty in Cary, N.C.
He said that a plan to freeze mortgage rates might harm liquidity in the mortgage market, as it could sap motivation from investors to purchase mortgage-backed securities.
If investor confidence in the mortgage market sinks further, that could make it harder for entry-level buyers, he said.
"I don't think (this) is going to make things easier for much of anyone," he said.
The principal of interfering with money markets could have a more dire impact on mortgage financing than the foreclosure problem, and he generally favors a hands-off approach to the workings of the market.
But he acknowledged that there are some very real problems with foreclosures. "I'm concerned about the overall status of the market. We've upset the apple cart big time. An adjustment is going to be made. If things get as grim as people say, the (Federal Housing Administration) is going to be the lender of choice."
Ultimately, the mortgage problems may heavily leverage the country, he said.
Realtor Krista Fuchs of Prudential Fox & Roach of Exton, Pa., said, "Something has to be done to stop the cycle of homes going into foreclosure," which can drive up inventory and drive down local home prices, potentially fueling more foreclosures.
But a rate freeze has pitfalls, too. "Freezing the rates will cause problems, possibly lawsuits," she said. "Hopefully, it won't deter future investors from buying mortgages. If that happens then the industry and economy is in much bigger trouble than we are now."
The problem is bigger than a "silver bullet fix," she said, and it appears "it's just the beginning."
Mark Anderson does see a silver lining, though, to a rate-freeze program. "If people are going to be losing homes, and they can keep them at a reduced rate or a current rate, I think it helps everybody. I think it helps Realtors, I think it helps mortgage investors," said Anderson, a Realtor for Keller Williams Classic Realty in Coon Rapids, Minn.
Buyers who were expecting a "huge fire sale" on homes may not like the idea of a rate freeze, Anderson said. "They want the market to continue sinking. But at the end of the day it's going to be helpful for everyone. It certainly beats the alternative of all those folks losing homes over the next five years."
And while there may be worries about lawsuits, Anderson said that was surely a part of the discussion in putting together a rate-freeze plan. "This could only be good for (investors)," he said, "They're not going to lose as much."
He added, "The breathing room and extra time should allow people with marginal credit to qualify and refinance themselves out of their adjusting ARMs."
The National Association of Realtors announced its support for the Bush administration's efforts to curb the rise in foreclosures by allowing loan modifications or a freeze in interest rates for some borrowers.
"The dream of homeownership should not turn into a family's worst nightmare," Richard Gaylord, NAR's 2007 president, said in a statement. "The loan modification program introduced by President Bush and U.S. Treasury Secretary Henry Paulson is a good first step in helping deserving families keep their homes."
The association also supports Fannie Mae and Freddie Mac reforms such as an increase in the conforming loan limit to aid home buyers in high-cost markets and improve mortgage liquidity, and also supports FHA modernization legislation.
Jerry Howard, president of the National Association of Home Builders, said that the plan has "the potential to get us out of this down cycle that we're in," as it could stabilize home prices and renew demand in new homes.
The home-building industry, he said, may start to see that increase in demand manifest itself in the second quarter of the year, with an increase in production by the third quarter.
He said that he didn't know how many owners of new homes might be eligible for the mortgage relief program introduced today.
Jennifer Bukaty, a broker for Bridgetown Realty Inc. in Portland, Ore., said she doesn't believe a rate-freeze plan is ultimately going to succeed because she believes there are too many legal complications.
She said that part of living in a free country is accepting responsibility for your actions.
"I think individual people made individual choices. I'm sorry about the mortgage industry, as well. I think the good ones are writing good, solid loans and doing the right thing," she said.
She acknowledges that the average consumer may not understand the intricacies of mortgage financing, adding that she directs her own clients to stay within their means and does not lead them to seek risky loans.
It might be more worthwhile to focus resources on the perpetrators of mortgage fraud, said Lenn Harley, broker for Homefinders.com, a real estate company that operates in Maryland, Virginia and Florida.
"I can't stand things that are unfair, and there's going to be a great deal of unfairness in this (plan)," she said.
She said any bailout plan will not prevent the inevitable -- properties that are already in a foreclosure process, though it may delay rather than prevent some aspects of the market downturn.
"Sooner or later the market will rule and when the market rules all of those people who didn't make mortgage payments go into foreclosure," she said.
Prices have been rising at a much faster clip than income, she said, and those prices will have to come down. "This isn't going to help," she said. "It's all political."
***
What's your opinion? Send your Letter to the Editor to Ray@SCVhometeam.com .
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