The First 2 of our 1000 Cool People have arrived

As you know, www.1000CoolPeople.com is my contribution to growing our population base in Historic Downtown Savannah. I'm proud to announce two new transplants to downtown, Jason and Bailey Rich. Check out all the details at www.1000CoolPeople.com.

The Wasted 4.44% Mortgage Rate

What strange times we live in--lowest interest rates ever, housing affordability at very good levels, and no one can get a loan. People, you need to get your financial house in order if you're ever going to buy a real house. Pay off your credit cards. Move your $150 cable bill down to $100/month. Stop eating out 3 times a week. It's a joke that people are still not qualifying for these loans. As my profile says, I'm not into BS, so I'm going to tell it to you straight--stop blaming the bank. If you cannot qualify for a loan, it's because of your own actions, not because the banks are out of screw you. Grow up and get rid of your debt.

FORTUNE -- It appears even the bright spots of this tired economy are still working against heavily indebted homeowners. Mortgage rates have hit new lows nearly every week, but many borrowers are still unable to take advantage of them.

Like it is in so many parts of today's sideways economy, relief is out of reach. Stimulus dollars are everywhere, but somehow never where they're needed most.

Last week, U.S. mortgage rates fell for the eighth consecutive week to a record low after the Federal Reserve said it would buy more government debt to help the economy recover. A 30-year fixed-rate mortgage in the week ending Thursday dropped to 4.44% from 4.49%, according to Freddie Mac, which noted it was the lowest since the mortgage finance company began collecting data in 1971. The 15-year rate averaged 3.92%.

The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They're certainly trying -- the Mortgage Bankers Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.

But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible. Last year the Home Affordable Refinance Program, or HARP, was created to help homeowners get new loans, but the program has only resulted in a small fraction of the refinancings the government aimed to enable.

"The qualifications are so much stricter," says Dale Robyn Siegel, CEO of Harrison, NY-based Circle Mortgage Group and author of The New Rules for Mortgages. "Banks have realized that even the best of borrowers have lost their jobs. A lot of people are really tapped out."

Doors closing

The stricter qualifications include a higher FICO score of at least 620, a higher down payment and lower monthly debt service ratios. Additionally, lenders typically won't loan more than the appraised value of a home. The troubled housing market has left an estimated 15 million U.S. mortgages -- one in five -- worth more than the value of the homes they helped purchase. The growing mountains of paperwork required and higher bank fees have also discouraged some from refinancing.

Add it all up, and you get a 4.44% rate that most Americans can't have.

The government-controlled Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500) either own or guarantee half of the nation's mortgages. Wall Street economists and analysts have called on the Feds to loosen lending standards and give breaks on fees so that more people qualify to refinance. In the short-term, this could free up household incomes and inject much-needed money into a slow-growing economy. But opponents argue it would only add to the hundreds of billions of dollars it will take to prop up troubled Fannie and Freddie.

The U.S. Treasury Department says it doesn't plan to ease refinancing rules.

It's easy argue against the idea of helping homeowners -- even the debt-ridden and jobless -- with their bills. After all, it can be said they bought too much house for their own good and bailing them out would only encourage the kind of irresponsible borrowing that sent the US economy into a financial crisis in the first place.

But lower interest rates, ideally, are meant to encourage investments - something the economy could use right about now. Instead, today's mortgage rates are doing nothing more than tempting those investors who can't have them.

Original article posted here.

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Vulture investors: They're back - and making a bundle

By Les Christie, staff writerAugust 5, 2010: 8:36 AM ET

NEW YORK (CNNMoney.com) -- These are the glory days of the residential real estate investor. Low prices, rock-bottom interest rates and stable rental markets have created huge buying opportunities.

"It's awesome right now. I don't think we'll ever see another time like this," said Tanya Marchiol of Team Investments, which has operations in about 10 states but focuses mostly on the Phoenix market.

These investors are known to many as vultures because they swoop in and buy "distressed properties" -- foreclosures and short sales -- cheap. Places like Las Vegas, Phoenix and Miami are popular because home prices there have dropped as much as 70%.

But how they're investing has changed. In the boom years, they would buy a property and flip it for a quick cash out. Today, they are holding and renting for hefty, steady incomes.

Once they analyzed their decisions based on home-price appreciation, which is very speculative. Now they consider potential rental profits, which is far more stable.

Back then, they flipped often and helped to bid up home prices into a froth. Now, the investors say, they can be a part of stabilizing neighborhoods.

Condos for less than the cost of a Corolla

"People are not in it to flip like back in the old economy," said Matt Martinez, an investor and author whose new book, "How to Make Money in Real Estate in the New Economy" comes out next February. "The new economy dictates that you have to have a long time horizon."

Marchiol, for example, does not even factor in home price appreciation for at least a year. After that, she calculates only a 3% annual increase -- a return that won't turn heads of investors who only want to buy low and sell high.

Marchiol just purchased four separate four-plexes in North Phoenix. Three years ago, each four-unit building sold for $310,000; she paid just $70,000 per building. She intends to spend about $64,000 rehabbing the properties, making her total investment $344,000.

In total, she currently owns about 17 rental units. Usually she buys the properties to keep herself, but she also works with a group of investors who are intent on holding them and renting them out. She can spot the deals and then sell to them.

For example, with her North Phoenix buildings, the investors will buy the buildings for $95,000 each. They'll put 20% down and finance the rest, about $76,000 per building.

At today's low interest rates, they'll get a near 5% loan. That yields a payment of about $400 a month. Figure another 10% of the price for property management, 10% for maintenance, an 8% vacancy rate, taxes, insurance and other home ownership expenses, and you're talking about a monthly nut of roughly $1,300.

Marchiol projects the apartments will rent for $600 a month each, for a total rent roll of $2,400. That gives the owners a profit of $1,100 per month and $13,200 per year -- a nearly 70% annual return on investment.

Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly. In Phoenix it's changed in just the past six months. Foreclosure auctions are no longer a fertile hunting ground for Marchiol.

"Amateurs have come in and run up the prices," she said. "In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I've bought four."

Glenn Plantone faces a similar situation in Las Vegas. A veteran real estate broker and investor, he has switched from buying mostly foreclosures and repossessions to short sales almost exclusively. That's because the inventory of distressed properties available in Vegas is way down, to about a two-week supply.

"The banks make better profits with short sales, so they're not foreclosing," Plantone said. "They've switched staff to processing short sales and they've gotten faster at processing them."

He tries to purchase properties for at least 10% less than what he considers to be true market value, then he does some light rehabilitation and sells them to some of the 3,000 buyers he works with.

Since prices have fallen about 70% in some Vegas communities and rents have only declined by about 20%, it's possible for his investors, who are cash buyers, to make money from the first month the homes are rented.

"We're getting cash flow (net return on investment) of 12% to 14%," he said.

He doesn't completely ignore potential profits from home price appreciation because he believes the town is bouncing around the bottom. (Homes already sell for below what it would cost to build new homes.) He does not, however, emphasize that aspect of the investment.

It's the income from rentals that's paramount right now.

The beauty of cash flow, of course, is that even if the prices decline another 10% or 20%, the investors should be able to live with that.

"I tell them to plan on holding for five years," he said. "With cash flow, there's no need to worry about price drops."

View original article here: http://money.cnn.com/2010/08/02/real_estate/new_vulture_investing/index.htm

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Home Shoppers Taking a Fresh Look at Renting

Yet another article about renting vs. buying. I maintain that renting makes a lot of sense in certain situations in this market. On the other hand, if you can put down 3.5% on a FHA loan, fixed rate at 4.75%, and it will cost you the same as renting, you'd be foolish not to buy. Never forget that there are tax advantages to owning, so a $1600 rental payment is going to wind up costing you more than a $1600 mortgage payment. You're going to be able to deduct your mortgage interest and property taxes. Feel free to ask me more about the tax advantages of purchasing a home and what payments would look like at different price ranges.

When Mark and Joanne Cleaver sold their 3,000-square-foot Arts & Crafts-style bungalow in Milwaukee earlier this year and relocated to Chicago, they did something they hadn’t done in 28 years: They became renters.

As a 50-something couple who’d moved up the property ladder — from a starter condo to a Victorian duplex to a metro Chicago bungalow and then to the Milwaukee home they bought in 2004 — they never thought that they’d spend their middle years renting.

But after selling their Milwaukee home in May for $13,000 less than they paid for it, a loss compounded by costly renovations and a 6 percent agent fees on the $280,000 selling price, they decided to embark on what Joanne Cleaver calls a “reset” of their life and real estate’s role in it.

“We lost two-thirds of our equity,” says Mark Cleaver of their Milwaukee home. “It definitely soured my view of home ownership.”

The Cleavers say they may rent for the rest of their lives. Their monthly costs to live in downtown Chicago are about $200 more than the costs of owning in Milwaukee, but their budget is more predictable — no more surprise $20,000 porch repairs or replacement snow blowers. And no taking a bath on the investment.

As the real estate market has turned, so too has the real estate consumer. Many adults are no longer sold on the merits of owning a home. Indeed, some are just as happy to rent — and instead of seeing owning as a benefit, they see it as equal to or even less appealing than renting.

The Commerce Department reported on Tuesday that the percentage of privately owned homes in the U.S. slid in the second quarter, but rental vacancies held steady.

At Trulia.com, which introduced rental listings to its site earlier this year, about 30 percent of visitors are “crossover” home shoppers tire-kicking both ownership and renting at the same time, says Tara-Nicholle Nelson, a consumer educator for the company.

“This is very new,” Nelson says. “This represents a wholesale rethink of whether the American dream includes homeownership.”

At Zillow, the real estate values and listings portal, Chief Operating Officer Spencer Rascoff says that roughly 25 percent of consumers using the company’s site this year have been “dual-track” home shoppers. Rascoff says these people figure out the monthly payment they can afford and run searches both on rentals and for-sale listings within their budget.

To help the “crossover” home shopper, Trulia periodically publishes research on the “price-to-rent” ratio in major American cities, comparing the annual cost of ownership to the annual cost of renting comparable condos/townhomes and apartments. While consumers use factors aside from cost to make their decision, Nelson says, the index can give them an idea whether ownership and renting conditions are improving or worsening over time.

The Cleavers are lucky. They have a choice to rent vs. own, but others don’t. The current homeownership rate of roughly 67 percent could fall to 62 percent over the next two to three years, according to John Burns, chief executive officer of John Burns Real Estate Consulting of Irvine, Calif. He estimates that six million of eight million American homeowners currently in default won’t be able to modify or otherwise resume paying their mortgages and will be forced to return to renting.

“The wild card is government intervention,” Burns says. The ultimate homeownership rate could be affected by how the government addresses the role of government-controlled mortgage companies Fannie Mae or Freddie Mac.

Burns says that his research indicates once consumers have seen the market behave the same way for three or four years straight, they assume it will stay that way forever.

“When housing bubbles burst, homeowners think of real estate as a poor investment,” he says. “It may take awhile for this idea to work itself out of the collective psyche.”

Where people are still buying, they’re using more conservative loans and thinking about debt differently. That’s partly because the loans available have stricter criteria, but it’s also partly the consumer’s request, says Anthony Hsieh, CEO of lending firm loanDepot. Seven years ago, he said, less than 20 percent of customers requested a loan with a term shorter than 30 years. Now he says 37 percent of LoanDepot.com’s customers are asking about shorter-term mortgages that would allow them to build equity faster.

“The number of people choosing these mortgages had doubled. People understand that a home is debt,” Hsieh says. “Real estate is a lot less liquid now than before.”

Hsieh predicts that the average age of the first-time buyer will rise, both because flat or falling home values have stripped a sense of “urgency” from buyers’ eyes and because in many markets rental housing may offer more luxury than a purchased home.

Where buyers are pursuing homes, they’re planning to stay longer, according to The National Association of Realtors. In 2007, buyers indicated they planned to keep their homes for at least eight years, according to the Realtors' Walt Molony. As of last November buyers were indicating they plan to stay a decade.

While the Cleavers are happy with their move to a 1,500-square-foot tower apartment that offers views of Lake Michigan, indoor parking, a workout facility with a pool, free bagels on Friday, and a walkable commute for Joanne, they’re still coming to terms with their sentiments about real estate.

As a self-described “army brat,” Mark Cleaver says he grew up believing owning was a ticket to success in the middle class. As the daughter of a pastor, Joanne Cleaver said her family lived in church-owned parsonages for all but three years of her youth. She says she vividly remembers her mother’s tears when her family moved out of the one home they had owned.

“It’s kind of ingrained in you that when you’re an adult, owning is a part of your life’s financial underpinning,” says Mark Cleaver. “Needless to say, now that’s a lot of bunk.”

Still, he catches himself watching HGTV.

“That feeling about owning is still hanging over me,” he admits. “I think ‘This is stupid!’

Jane Hodges ( www.janehodges.net ) is a Seattle-based business journalist.

View original article here: http://www.msnbc.msn.com/id/38415637/ns/business-real_estate/

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.

Keller Williams Realty Named Highest Ranked in Home Buyer Satisfaction by J.D. Power and Associates

I joined Keller Williams almost four years ago and we've grown every month, without fail, during what turned out to be a horrible real estate market. The fact that buyers rank us highest is a testament to the learning culture at Keller Williams. Our motto is Win-Win or No Deal, and I think the proof is in the ratings. You know I've always positioned myself as the no-BS broker, and I can honestly say I have no idea why any real estate agent would work for any other company. Feel free to ask me more about Keller Williams.

Keller Williams Realty Named Highest Ranked in Home Buyer Satisfaction by J.D. Power and Associates for Third Straight Year

AUSTIN, TEXAS (July 30, 2010) —According to the J.D. Power and Associates 2010 Home Buyer/Seller Study^SM, Keller Williams Realty, Inc., the third largest real estate company in the United States, has received the highest overall satisfaction ratings from home buyers among the largest full-service real estate firms for the third year in a row. The company also ranked second among home sellers in the study for the second year in a row.

“We are incredibly proud of our associates for earning this distinction and want to thank them for their commitment to their clients and communities," said Mark Willis, CEO of Keller Williams Realty. “We see this honor as demonstration of our company philosophy that it is the agent’s brand that matters most and no amount of money spent on advertising can replace the influence and reputations our agents have in their local communities. Our associates have earned this on their own, by building relationships in their communities."

The study was produced by J.D. Power and Associates to measure home buyers and sellers customer satisfaction. The results of the home-buying experience were determined by three factors including the buyer’s experience with their agent, the real estate office and a variety of additional services. Keller Williams Realty performed particularly well in the agent and office factors. And, overall satisfaction of buyers for the industry was up over last year.

Additionally, the study noted that the importance of real estate agents has increased substantially in the past year, with buyers and sellers relying on the negotiating skills of their chosen agent and help in navigating the market.

“It is thrilling to see our firm, once again, get public recognition for its incredible focus on customer satisfaction from such a prestigious group. Our associates continually demonstrate that it is possible to deliver the highest level of customer service in one of the toughest real estate markets on record," said Mary Tennant, president and COO of Keller Williams Realty. “We feel incredibly fortunate to be in business with them, and want to congratulate them on their hard work and dedication."

In the past year, Keller Williams Realty has continued to grow despite the well-publicized turmoil in the real estate industry. In addition to becoming the 3^rd largest real estate company in the U.S., surpassing RE/MAX®, Keller Williams Realty was ranked as the No. 1 real estate franchise on the 31^st Annual Franchise 500 list by Entrepreneur magazine and was voted the Most Recognizable Brand of Real Estate Franchises and the Trendsetter of the year for 2009 in an industry-wide survey for the Swanepoel TRENDS Report.

Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.